EIF’s AGRI is a new initiative managed by EIF on behalf of the European Commission that aims to facilitate greater access to finance to Farmers, Agricultural holdings, Cooperative, Rural micro- or small enterprise, Forestry business) in the EU member states who are often considered to be riskier final recipients.
By offering reduced overall interest rate and/or collateral requirements via selected financial intermediaries, the initiative’s objective is to increase the amount of finance made available to agriculture, agro-food, forestry and rural businesses. It also support the creation and development of non-agricultural activities in rural areas and forestry technologies.
This instrument provides a high leverage creating larger market impact of European Agricultural Fund for Rural Development (EAFRD) and national/regional resources. As a guarantor, EIF is acting in its own name but for and on behalf of, and at the risk of the region/ EU Member State participating in the Facility.
Who is eligible* to become an EIF’s financial intermediary under the AGRI Guarantee Facility?
- Guarantee institutions, guarantee schemes or other Financial or credit institutions, leasing companies or loan funds duly authorised to carry out lending or leasing activities or issue guarantees in accordance with applicable laws and regulations, established and operating in a participating country;
You are a Financial Intermediary: what are the benefits?
- The first loss portfolio guarantee enables selected financial intermediaries to undertake greater business volumes by providing credit risk coverage on a loan by loan (or lease by lease basis) for the creation of a portfolio of loans (or leases) with a maximum loss amount of up to 25%. This cap rate ensures an alignment of interest on the financial intermediaries’ side.
- Selected Financial intermediaries build up a new portfolio of loans (or leases) under this initiative within an agreed period ranging between 3 to 5 years. The guarantee can also be structured as a counter-guarantee instrument, or may be combined with other EIB Group financing facilities, subject to a separate loan application process
- Coverage of losses at portfolio level, up to the portfolio cap which is set in accordance with the estimated expected and unexpected loss;
- Quick payment in case of default;
- Additional benefits stemming from EIF’s multilateral development bank status – for example, EIF guarantee may offer capital relief (subject to the Regulator’s approval).
You are a Managing Authority: what are the benefits?
- Quick and easy access to funding by final recipients ensuring a fast achievement of the programmes’ targets;
- High leverage of this type of instrument (leverage is known ex ante) minimum 3-4 times, depending on the guarantee rate and guarantee cap rate set in advance;
- Strong partner in relationships with financial intermediaries;
- Adaptable parameters such as the guarantee rate or the availability period according to needs during the development process;
- Attraction of additional private resources that are adding to the volumes disbursed in the economy;
- Revolving instrument enabling you to finance additional final recipients with little resources;
- Significant visibility of the instrument;
- Lower national contribution due to higher EAFRD contribution rate;
- Regular updates by EIF on the progress of the implementation;
- Annual reporting cycle.
*For details about eligibility criteria, your roles and responsibilities please refer to the call for expression of interest documents and to the AGRi leaflet or contact EIF at: email@example.com
How to apply
For financial institutions:
EIF will select Financial Intermediaries after a call for expression of interest process. After applying, you will have to be pre-selected before the EIF undertakes to start a full due diligence process and brings the proposal further in the approval process. The first pilot project was developed in collaboration with the Managing Authority of the French region Languedoc Roussillon Midi Pyrénées For details, refer to the Call for Expression of Interest for the Financial Instrument “Capped Guarantee published at: FOSTER EAFRD Fund-of-Funds.
For entrepreneurs (Farmer, Agricultural holding, Cooperative, Rural micro- or small enterprise, Forestry business, or other eligible SMEs based in the EU member states):
To apply for a loan, you must contact the financial intermediaries selected for each country. The facility will start rolling out in 2016 and financial intermediaries will start operating under it gradually. Further information will be posted on this webpage as soon as it is available. For information about finance available under further EU initiatives, please visit www.access2finance.eu