The Government of Aragon is going to allocate 13 million euros of public spending to accompany subsidies to the youth establishment in the agricultural sector and facilitate the modernization and improvement of agricultural holdings.
“It is a way to promote easier access to credit for farmers and ranchers under better financing conditions than those of the market, with special emphasis on young people,” explain sources from the Department of Agriculture, Livestock and Food of the Government of Aragon. “It is an administratively simpler and more agile process than applying for a subsidy,” they add.
The Centralized Management Financial Instrument is within the CAP Strategic Plan (PEPAC) 2023-2027 and is conceived as a support mechanism that acts as a source of guarantees for the final recipients in rural areas.
It has a 57% financing by the Government of Aragon, while the remaining 43% comes from European funds. The IFGC-G will be “a form of support for the sector by offering standard loans to make investments that allow the modernization and improvement of farms or working capital expenses to support the establishment of young people, with preferential conditions regarding to the interest rate and guarantees,” they add.
In this way, the IFGC-G allows finance a wide range of investments such as the construction and improvement of agricultural or livestock facilities, the purchase of agricultural machinery, the implementation of irrigation investments within the plot or the purchase of land in the case of young people.
This opens the doors to carry out loans for amounts between 60,000 euros and 600,000 euros per holding.
Young farmers and modernizing farms
In the case of financing working capital, Aragón will focus on young farmers who establish themselves in the agricultural environment through an establishment file within PEPAC.
The secured loans They will thus be aimed at financing expenses such as the purchase of seeds, fertilizers, phytosanitary products, or payroll management, among others, for a minimum value of 15,000 euros and a maximum of 60,000 euros per holding.
Aid is received before making the investment
These loans, once the suitability of the recipients has been analyzed, have a endorsement of the IFGC-G through SAECA corresponding to 80% of the amount, with a limit of 20% of the portfolio. Furthermore, as a particularity of the IFGC of Aragon, in the case of loans for investments in the modernization and improvement of agricultural holdings, they will also have a bonus on interest costs of two percentage points during the first five years of validity of the contract. of loan.
Multiplier effect
From the Department of Agriculture they indicate that another of the characteristics of the IFGC is its multiplier effect. That is to say, for every euro of public spending contributed by the administration, this translates into a guarantee capacity of more than six euros.
In the case of Aragon it represents a potential for realizing guaranteed loans in the amount of 81 million of euros.
Requirements to request loans
The IFGC-G has another advantage regarding the requirements that beneficiaries must meet, which are less demanding. So for applications for guaranteed loans that finance working capital, the IFGC will be allocated to all those natural persons who have an establishment file approved by the Government of Aragon within the framework of PEPAC 2023-2027 in Aragon, which is in the phase prior to final certification.
In the case of guaranteed loans intended for investments in the modernization and improvement of agricultural holdings, when requested by a young person, they must meet the aforementioned requirements. For the rest of the applicants, they will be required to be owners of an agricultural holding in Aragon registered in the corresponding official records.
Furthermore, in the case of natural personsyou must be affiliated with the agricultural Social Security regime corresponding to your activity, at least one year before the application. While, in the case of legal persons and entities without legal personality, it will have to be justified that their main purpose is agricultural activity.
Finally, regarding the advantages of this system compared to subsidies, it is that the aid is received before making the investment.Application processThe IFGC-G is based on a public-private collaboration, in which each of the participants has a defined role. The farmer, through the financial entities attached to the IFGC, makes the request for aid.
The General Directorate of Rural Development, in turn, issues the resolution on the right to access the loan that includes the result of the SAECA credit viability report, communicating it to the Ministry of Agriculture in the form of an Individual Investment Decision.
This sends an instruction to SAECA authorizing it to guarantee the loan on behalf of the IFGC, and the interested party can then go to the collaborating financial entity to formalize the loan, which will be carried out only if the financial entity considers the operation viable, according to the result of its mandatory risk reports. The maximum period to formalize the loan in Aragón is six months from notification of the resolution.
Previous experiences
There has already been previous experience in Spain with this financing model in the previous Multiannual Financial Framework 2014-2022 through its accession by the autonomous communities of Castilla León, Galicia and Extremadura through their Rural Development Programs. Which has meant making more than 1,200 loans for a global amount of 194 million euros.
In the case of Castile and Leóna very satisfactory result has been obtained since, with a public amount of 26 million euros, the formalization of guaranteed loans for an amount of 182 million euros has been allowed in said community.
Aragon is a pioneer in the implementation of this financial instrument within the PEPAC and has done so so that interested parties can request aid from the IFGC-G from the entry into force of the order, until December 2027. In this way, facilitates access to guaranteed credit at any time. So far, ten autonomous communities have expressed their willingness to replicate it in their territory.
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