FLEXIBLE SCHEMES FOR FINANCING TO AGRICUTURAL PRODUCERS

The products of First Investment Bank presented by Nadya Koshinska - Director of "Lending to Small and Medium-Sized Enterprises".

Bank lending constitutes a very important part of agricultural business. It is a pleasure for me to present First Investment Bank and the products is has designed for agricultural producers.

The Bank has been supporting the agricultural producers who applied for and received financial aid from the "Agriculture" State Funds ever since the pre-accession European funds. So we have established a long partnership with the farmers.

Overdraft for farmers on the basis of the Single Area Payment Scheme

For the first time we introduced this product to the Bulgarian banking market last year and then other banks followed us. We offer a loan amounting up to 100% of the subsidy amount due for the declared agricultural land. The farmers have the option to use these funds in advance before their actual payment by the Paying Agency. The term for using this loan is up to 12 months and the loan is repaid upon the transfer of the subsidy amount into the farmer’s account with the Bank. The documentation required for submission at the bank is limited to the maximum possible extent and the procedure is very simplified since the lending is based on a practically secure receipts. The customer should present a copy of the general application for single area payment containing the bank account into which the subsidy amount should be transferred, a copy of the agricultural producer’s registration and a set of accounting and legal documentation. The loan is in overdraft regime which means that it can be used and repaid every day in accordance with the client’s needs. If you have spare money, you can deposit them into the account and thus reduce the principal amount and minimize the interest differences. The collateral in this case is a special pledge on the receipt of the funds due by the Paying Agency on the basis of the General Application for Single Area Payment.

Lending to projects under measure 121 of the Agricultural and Rural Development program

Another product, offered by the Bank is connected with measure 121 under the Agricultural and Rural Development program which started a few months ago. If you have submitted or you are going to submit a project under this measure and you have still not found a source of financing you can address our bank for cooperation because we have the option to finance 100% of the approved investment expenses. The conditions under which measure 121 projects will be financed include besides the payment of the subsidy amount after the project realization also the advance usage of a part of the subsidy amount against the presentation of a bank guarantee. In this case First Investment Bank can issue a bank guarantee which usually amounts to 110% of the transferred financial aid if you have concluded a contract with the Ministry of Agriculture and Food. That is to say that if you would like to receive a part of the subsidy in advance and to have a bank guarantee issued by your servicing bank, this option should be negotiated with the ministry in advance. If the project is for farming machinery and equipment, the bank will accept as collateral a pledge on the financial aid contract which you have concluded with the Ministry of Agriculture and Food and on the machinery subject of the investment. If the project is for planting perennial plants or for construction and repair woks, then additional collateralization will be required. An essential point is that we will strictly monitor the target utilization of the subsidy amount paid by the Paying Agency on the basis of which we have issued you the bank guarantee.

Investment Loan for the purchase of farming machinery and equipment

The loan can be granted in a currency at your discretion. The loans amount up to 100% of the investment amount. The loan repayment term is up to 5 years. It is conformable to the requirements for the projects under this measure, which have to be submitted to the "Agriculture" State Fund. The repayment method complies with the specifics of the borrower’s business. The only mandatory condition is that part of the loan principal is repaid upon the transfer of the free financial aid; the repayment of the remaining principal is negotiated in accordance with the periodicity of your income. So the repayment schedule can be very flexible. If we are granting a loan of up to 80% of the investment amount, then the only required collateral will be the machinery or the equipment to the purchased. If the financing is 100% - then additional collateral will be required and it will be released after the subsidy transfer and the partial repayment of the investment loan principal.

Loan for construction and repair works or for planting perennial plants

A more important difference here in comparison with the above product is that the repayment term is 10 years.

Loan for land purchase

First Investment Bank was among the first banks to provide farmers with loans for the purchase of agricultural land. Unfortunately this product is not commonly used because of the existing problems connected with land parcellation. Land consolidation and purchasing of separate parcels is difficult. At the moment however land purchase is quite topical. For loans amounting to 100% of the market evaluation of the land, besides the land, you will have to provide additional assets as collateral. If the loan amounts to only 70% of the land market value, then the land will be sufficient for the loan collateralization. The repayment term is 15 years. You can receive a credit line, i.e you will have loan availability within a year or two. You will have the option to activate only a part of the loan, on which debit interest will be accrued and the rest of the credit line will stay as an available balance for a possible deal, without incurring any expenses.