There are things that must be done. Fields must be sown. Seeds, fertilizers and diesel needs to be purchased. Machinery needs to be repaired. Kettle must be fed. Livestock must be replenished. Machinery needs to be purchased. Let us not talk even about losses caused by wind, sun, rain and pests, or the need to repair or build buildings.
We have a new simple loan for farmers. No property mortgage required.
Citadele Bank has developed the Support Loan for Farmers, a new product to assist farmers' enterprises. This product is easily and promptly accessible to all farmers who cooperate with the Rural Support Service (RSC). The difference between Support Loans for Farmers and Citadele's other loans offered to farmers is that Support Loans are granted without mortgaging property, and an accelerated procedure is applied to reviewing applications. Loan sums range between EUR 1'000 and 20'000, and loans are issued approximately within five business days after receiving applications. Simplified assessment rules are applied to this type of loan: the key criterion for the bank is area payments received from the RSC. Loan limits are up to 70 % of the average annual unified area payments received during the past two years. This means that Support Loans for Farmers are available for those farmers who own at least 25 hectares of agricultural land. The annual interest rate is 14%, and loans are issued for one year, with an option of extending them.
"I am glad that Citadele has developed a special proposal for Latvian farmers because, up to now, it was frequently difficult for farmers to receive loans from Latvian commercial banks. Citadele's new product speaks volumes of the successful relationship between the Rural Support Service and the bank, and Latvian farmers will greatly benefit from it. This product will be of interest to small and medium farmers and agricultural companies. This is very important because it is particularly small and medium farms, and agricultural businesses that ensure social and economic activity and population in Latvia's rural regions,” Jānis Dūklavs, the Minister for Agriculture, emphasizes.
“We have simplified this loan to the maximum extent possible in order for it to be easily and promptly available. The key task of the support loan is to provide farmers with assistance at moments when they suddenly encounter a need for additional investments that need not be financially intensive, yet substantial for farmers. Farmers do not always have the opportunity or desire to mortgage their property, therefore prompt and simple loans are our response to various situations when farmers are in an immediate need of funds. For example, when preparing for the new agricultural season, farmers may need to purchase seeds, fertilizers, fuel, or repaid their machinery. Their routine operations also generate costs, such as purchasing forage or machinery, eliminating losses caused by natural calamities, replenishing livestock, repairing and building buildings, as well as paying wages,” Ieva Vērzemniece, Head of Citadele Bank's Small and Medium Enterprise Services Division, explains.
"Loans in the amount of up to EUR 20'000 are indeed necessary because it is important for small farmers to receive loans for obtaining current assets. This type of support is mostly necessary before sowing when farmers need to purchase seeds and fertilizers. Loans may help improving small farmers' viability. I think that the bank's simplified conditions for taking loans is a positive development," comments Ģirts Krūmiņš, Deputy Head of the RSC.
Loan applications are accepted at all branches of Citadele, across 20 towns in Latvia, as well as at the bank's headquarters in Riga, at 2a Republikas Laukums. Applicants for Support Loans for Farmers must submit their applications appended with information on the unified area payments received during the past two years, and the currently declared areas. This loan is available to all types of agricultural companies: farms, limited liability companies (LLCs), individual merchants, and joint stock companies, for any purposes that may occur in agricultural business.
In the corporate segment, lending to SMEs and farmers is Citadele Bank's priority. After changing its owners in 2015, the bank has tripled the amount of loans issued to Latvian farmers. Moreover, the number of loans issued has increased by 61%. In 2015, Citadele Bank granted 140 loans in the amount of EUR 22.9 million to farmers in Latvia. This is an increase of 192 % compared to 2014 when only 87 loans for the total sum of EUR 7.8 million were granted to farmers. The loan sums issued to farmers have increased as well. The average loan sum issued in 2015 was EUR 163'000, which is an 81 % increase compared to 2014 (EUR 90'000). Financing issued to farmers for purchasing machinery by means of leasing also increased from EUR 3.8 million in 2014 to EUR 7.5 million in 2015.