What credit for a farmer?
Currently, there are over 1.5 million farms in Poland with an area of more than 1 ha, of which more than half a year achieves the value of agricultural production lower than about zł. Only every fourth receives a value greater than 32 thousand. zł. Agricultural activity requires funds necessary for the proper functioning of the farm and its development. The lack of own funds forces farmers, especially those preparing to invest in the purchase of land or agricultural machinery, to use external sources of financing, such as EU funds or bank loans. However, they approach the latter with great caution, even if they are available on favorable terms.
A farmer can use a bank loan for both investments and ongoing operations, especially in the face of market fluctuations, an increase in demand for materials and services, or a large discrepancy between expenditure dates and obtaining revenues. Loans enable the implementation of investments, allowing for their faster completion, reduce the risk of losing liquidity on a farm, and finally allow the resumption of production on farms affected by a natural disaster. The use of credit can positively affect the situation of a farm by obtaining an appropriate scale of operations, increasing efficiency and greater flexibility in relation to market needs. Additional funds, despite burdening the farm, contribute to the increase of its profitability, improvement of financial liquidity and increase of work efficiency. Loans, especially investment loans, enable farm modernization and change the structure of Polish agriculture. Bank loans often complement non-returnable funds from EU funds.
The amount of land owned or the age of the farm.
Meanwhile, large commercial banks are cautious about the client who is a farmer, considering the income from farming or animal husbandry to be quite uncertain. The majority should not refuse to grant a loan, however their standard banking products may be subject to requirements regarding, among others creditworthiness, the amount of land owned or the age of the farm. Preferential loans offered by banks cooperating with the Agency for Restructuring and Modernization of Agriculture may be a sure solution for farmers. However, these only serve investment purposes, which is why they cannot be used to buy agricultural products or purchase fuel. Only some entities, such as Górnośląskie Towarzystwo Finansowe, for example, have an offer of universal products addressed to this professional group. GTF provides farmers with cash loans up to PLN 200,000 PLN for the purchase of machinery, feed, land or pigs; Business Loans up to 300,000 without property collateral for farmers running the farm for at least 12 months as well as loans with collateral on the vehicle and consolidation. Taking out a loan does not involve unnecessary formalities or fees, and the farmer receives the decision to grant the loan within a maximum of 2 days.
Credit or loan? It’s worth knowing the difference.
When choosing a loan, you should pay attention not only to the interest rate, but also whether the entity granting it collects, for example, a commission for examining the loan application, a fee for establishing collateral or early repayment of the loan or requires property insurance. An injection of cash in the form of credit enables operation and development of a farm, you just need to find the right institution that will grant it on the best terms.
Loans without interest with a high commission or no commission, but with a high interest rate – which is better?