EIB and Rabobank provide €200 million ‘cheap’ loan scheme for farm sector

Farmers and agri-food SMEs are set to benefit from a new €200 million low-cost loan scheme from the European Investment Bank (EIB) and DLL – a global vendor finance company and subsidiary of Dutch lender, Rabobank.

The new scheme, agreed in Dublin today, will strengthen leasing and financing for SMEs and mid-cap companies active in agri-business, the food industry, construction, transport and other sectors.

It will be supported by a €100 million EIB loan, with an additional €100 million matched by DLL.

The scheme, which will be managed by DLL Ireland in Dublin, is EIB’s largest support for investment by Irish companies, with a commercial financing partner, for six years.

Andrew McDowell, EIB vice-president said: “Food, agri-business and construction companies across Ireland will be able to grasp new business opportunities and expand activity with the significant new financing being made available today.

Speaking to AgriLand, Fergal O’Mongain, group treasurer and country manager of DLL Ireland, said the leasing company has become a niche finance operation in the Irish market, where it focuses on financing assets.

“We are currently active in the agricultural sectors. Food is a new focus area, there are a lot of good Irish SMEs in the sector and it’s an area that we believe is sustainable,” he said. However, he admits there are some “minor” concerns about Brexit.

“It’s a sector which is probably most exposed to Brexit. But every little helps. For us it’s nice to be able to pass on some level of discount in terms of financing,” he said.

Big ticket items

DLL is not regulated in Ireland to provide loans for purchasing additional farms or for working capital purposes.

“Our focus is in the equipment side. In terms of criteria, as long as the farmers aren’t involved in any production of tobacco or things of that nature, the farming activity would qualify. SMEs are the target of the EIB funding.

Generally speaking farmers will qualify and the benefit we will be able to provide is about 0.5% reduction in cost of funds. Where that would really have an impact would be on the larger ticket items.

However, in order to qualify, deals must be active for greater than two years.

“We’re really looking at three, four, five and six year leases on tractors, combines, balers, all those types of machines,” he said.

Available loans must not exceed €12.5 million for a particular project.

The new financing agreement was signed earlier today in Dublin, by Andrew McDowell, EIB vice-president,  and Fergal O’Mongain of DLL Ireland.

The new programme follows the successful roll-out of a similar €25 million financing pool, established by DLL and EIB, earlier this year for climate impact projects.

The European Investment Bank is the world’s largest international public bank. Last year the EIB Group provided a record €33 billion for SME financing that benefited of 300,000 companies worldwide.