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Money onto the field
25 May 2015
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Banks now offer loans sparingly and they are expensive. However, as "Dengi" found out, there are still loans to agricultural business, and leasing, and factoring.

Banks no longer trust business. Including agricultural companies that proved their ability to pay during the last crisis (2008-2009). Even after two years of record harvests. Mostly reduced were medium and long-term loans. First of all, this is connected with the risk of not returning loans and the overall negative economic situation in the country.

Indeed, many banks are willing to lend only to their old and trusted clients. And if anyone dares to lend to customers from "the street", they put forward a long list of requirements for such borrowers. To qualify for the loan, the business should work for more than two and better three years. The best that a "newcomer" can currently expect are short-term loans with a firm collateral. Hardly ever will small businesses get a loan; banks now lend to business with a land fund area of ​​at least 100 hectares. Banks like bigger businesses. "We focus on agricultural producers, processing more than 500 hectares of arable land. We need to carefully consider the possibility of the borrower to service and to repay the debt. And small businesses often do not have detailed production reporting", explains Olena Rudyk , the Head of FUIB's SME department.

What do they give for

In general, banks offer three types of lending to farmers - for replenishment of the working capital, purchase of equipment and the promissory notes program. Now, in Ukraine seven banks, including FUIB offer loans for farmers. Banks give loans to farmers for replenishment of working capital for 1-3 years at a price of 19-26% per annum in hryvnia. How much you will get depends, first of all, on the turnover of the enterprise and the assessed valuation of the collateral. Preferable collaterals for the loan are real estate, vehicles, equipment or machinery, but collateral in the form of exchange commodities or a deposit can also work. Banks are ready to offer special repayment schedules for agricultural enterprises taking into account the seasonality of the production cycle. The company may repay the loan upon receipt of the proceeds from the sale of products or sel ect the standard scheme of repayment.

Paper exchange

Most banks offer farmers to pay for seeds, fertilizers and crop protection agents through the issuance of ordinary commercial bills for payment for the products. "Now the banks most actively offer customers products such as bill avalization (provision of guarantees) and guarantee of payment, which are the best alternative to the classical lending," says Olena Rudyk. Promissory notes enable farmers to buy plant protection products and seeds with deferred payment from the supplier. The price of such a loan is lower than traditional bank lending by 4-5 times, and the presence of an avalized bill allows the buyer to fix the price of goods in hryvnia (unlike to a conventional commercial loan of the supplier). To get this loan, you must first apply to the official distributor of the manufacturer to determine the volume of the purchases. When an agreement with a distributor is signed, you should contact the bank to obtain bank guarantees for such obligations.

Usually banks offer commercial papers under the affiliate programs, FUIB has them too. Grace period according to the bill programs is 6-12 months. Some banks may provide loans of up to 160 thousand UAH without collateral. The company needs within the given period (9 or 12 months) to pay the obligations under the bill, but the payment of fees must be performed on a quarterly basis.

By the way, the commission depends on the collateral. If property stands as collateral, the commission is 1.1-2.3% of the total bill for every 90 days. If a deposit is used as collateral, some banks are ready to reduce the commission up to 0.25%.

Other scale

And what if you need a new harvester? In principle, banks are ready to finance even such a large scale purchase. However, the company must be prepared to put up at least 25% of the advance payment. And yes, only a financially reliable borrower with the land fund of 200 hectares and a turnover of at least 15-20 million UAH per year can get the loan for the machinery. Credit machinery will cost 25-35% per annum. Considerable expenditures are spent on the insurance for machinery - from 1 to 5% of the loan amount. Another 1-1.5% of commission you will have to pay on the receipt of the credit. Maximum term is 5 years.

Sometimes banks, in addition to the purchased equipment require to provide additional collateral - own vehicles, equipment and real estate, agricultural machinery. And, of course, the larger the mortgage is, the less the requirements for advance payments are.

You need it cheaper? You should pay attention to a variety of partnership programs which banks have with dealers of machinery. At FUIB you can get a loan to purchase equipment from the company "Agro-Soyuz" under 15-16,7% per annum and without commission.

Source: Magazine "Dengi” fr om February 26, 2015


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