Preferential loans for customers from the agricultural sector have once again appeared in the offer of BNP Paribas Bank in Poland. Appropriations can be used to purchase land, cover investment costs on a farm, or resumption of agricultural production following a natural disaster. The Agency for Restructuring and Modernization of Agriculture (ARMA) pays the capital repayment and the interest rate, which significantly reduces the costs incurred by the customer.
For customers concluding a preferential loan agreement with BNP Paribas Bank, ARMA will guarantee a specific amount of aid in interest or capital subsidies. Regardless of market conditions, this amount is determined once and does not change throughout the loan period. In addition, special regulation of the Council of Ministers regulates the margin levels and indicates the maximum amount of fees that the bank may charge.
«Our experience – we have been servicing preferential loans for nearly 30 years – shows that this is the most advantageous form of investment financing. ARMA repays even 1/3 of the interest for the customer. This medium brings the costs down to a level unattainable with commercial financing. Moreover, BNP Paribas Bank offers its customers attractive conditions with low fees and additional promotions,» – explains Piotr Pieniążkiewicz, Senior Agri Product Expert in the Agri Product Development Team of BNP Paribas Bank.
Until May 31 this year, for customers who submit applications for preferential loans for the purchase of land and other investments, the Вank offers promotional conditions – a reduction of 1 % of the fee for granting the loan and 1 % of the compensation fee in the case of early loan repayment. New customers who open a current account with a debit card and online banking before the end of May can count on a special promotion of the Agribusiness Open Account – the Вank will not charge an account maintenance fee for the first six months. In addition, farmers who will benefit from the promotions mentioned above will have free access to the Agronomist platform.
Preferential loans can only be obtained by farmers who meet the specific conditions specified by the ARMA.
Loans for the purchase of agricultural land
The financing can be used to purchase land for agricultural purposes specified in the spatial development plan of a given commune. In the absence of a project, it is required to provide a certificate from the commune informing about the lack of a spatial development plan and a decision on development conditions changing the intended use of the area being purchased. The total size of the farm, including the newly purchased land, may not exceed 300 ha, and the loan amount may not be higher than the product of the number of hectares bought and the average price of the Central Statistical Office (taking into account valuation classes).
The rules for granting preferential loans for the purchase of agricultural land currently provide for two preferential loan lines:
The MRcsk line – for people up to 40 years of age starting the agricultural activity, in which ARMA’s assistance consists in paying off 60 % of the loan amount (but not more than EUR 20,000). The applicant may not run a farm for more than 24 months.
Line Z is for individuals and legal entities conducting (or intending to conduct) agricultural activity. ARMA’s assistance is used to repay 1/3 of the borrower’s interest. The interest rate on the Z line is floating and may not exceed the WIBOR 3M reference rate increased by the Bank’s margin of no more than 2.48 percentage points (as of April 14, 2022, the interest rate is 4.1071 %).
Loans for other investments
ARMA also supports investments in farms, special departments of agricultural production, and agri-food processing plants, such as construction, modernization, or purchase of machinery or equipment. Work on a given investment must start no earlier than the day the loan application is submitted to the bank. The rules for granting loans for this purpose are defined in two lines of loans: RR and PR. The maximum loan term is 15 years. It is possible to obtain a grace period of up to two years. The loan costs are the same as for line Z, except that the amount of aid is not limited to EUR 20,000.
Support after a natural disaster
As part of the particular line K02, it is possible to purchase funds intended for the resumption of agricultural production after a drought, flood, or another natural disaster. It may be the purchase of, for example, plant protection products, seeds, fuel for agricultural purposes, feed, or livestock. The loan is granted for four years, counted from the date of the natural disaster or the signing of the protocol by the Voivode (in the case of drought).
The total interest rate on the K02 loan is determined based on the WIOBOR 3M rate determined analogously to investment lines. The margin level is 3.5 percentage points. The interest rate paid by the customer depends on whether the customer had at least 50 % of the area of crops or livestock insured in the year of the disaster. Such customers can count on an interest rate of 0.5 %. It is a fixed interest rate until the amount of aid specified each time in the loan agreement is exhausted. If the customer does not meet the insurance condition, he can count on additional payments in the amount of half of those due to the insured (the current interest rate is 3.825 %).
Details on the terms of granting loans, promotion rules, and the amount of the current interest rate are available at: https://www.bnpparibas.pl/rolnicy/kredyty/preferencyjne-kredyty-inwestycyjne.
Source: the Bank’s press release dated April 19, 2022