Thanks to the support, new machinery costs less than second-hand

Farmers are often faced with high financial costs that can make it difficult to develop their farms. To alleviate this burden, an interest compensation option is proposed, allowing partial interest repayments on lease or loan payments. This financial assistance is particularly important at a time when borrowing costs are constantly changing and farms are struggling to plan their investments efficiently.

Application for compensation online

Ričardas Kuliešius, who farms in the Pakruojis region and has been working in agriculture for more than 15 years, owns a 200 ha farm specialising in crop production, growing wheat, barley and oilseed rape. As part of the ongoing modernisation of his farm, he often uses financial instruments to buy both land and machinery. One of the farmer's latest solutions is to lease a combine harvester, taking advantage of interest compensation.

„When I started thinking about a newer combine harvester, I realised that the interest rates on second-hand machinery are high and that interest compensation is available for a new combine harvester. After doing the calculations, it turned out that a new combine harvester with compensation would cost me less than a used one. The process was simple – I filled in the documents online, contacted the ILTE financing partner and received confirmation of the interest compensation in less than a month“, – says R. Kuliešius.

The farmer adds that although the paperwork required some corrections, he managed to submit everything independently.

„Although there were a few minor mistakes in the application, the bank's consultants were very clear and patient in explaining what needed to be corrected, and we completed everything without too much difficulty. The process was quick and smooth, and most importantly, I was able to submit the application online without leaving my home," says R. Kuliešius.

The farmer benefited from two of ILTE's financial instruments: the reimbursement of the guarantee fee and the reimbursement of the interest, which together amounted to almost €9 700. According to Mr Kulietis, this assistance was crucial to reduce the farm's financial burden and to ensure that the investment in new machinery would pay off more quickly.

Successful compensation can be determined by one key criterion

Giedrė Gečiauskienė, Head of Clients and Financing Solutions and Member of the Board at ILTE National Development Bank, says that interest compensation for loans and leasing services for guaranteed investments is extremely popular. In 2024, EUR 4.58 million was allocated for this purpose, and the average amount of compensation was EUR 11,412.

„Our aim is to make it easier for customers to access finance. Compensation helps to reduce costs, leaving more money for farm renovation and development," says G. Gečiauskienė.

She notes that the change from quarterly to monthly reimbursements from 1 November 2024 has made it easier for farmers to plan their financial flows. This has allowed them to use the reimbursements more quickly and to invest in farm development.

It should be noted that interest compensation can only be applied to one loan or leasing contract at a time. If a farmer has already received a refund and submits a new application, it may be refused. It is therefore advisable to check your options in advance before applying for new financing.

„To receive interest compensation, farmers should apply directly to one of ILTE's funding partners, with whom the contract will be concluded. Once the application is submitted, the bank or other financial institution prepares the documents and we take a decision within 20 working days. This simplifies the process and helps farmers to avoid unnecessary worries, explains G. Gečiauskienė.

Markas Žukovas, Senior Project Manager at Bank „Citadele“, one of ILTE's funding partners, emphasises that farmers, like representatives of other sectors, are often faced with various challenges when applying for compensation.

„In order to speed up the application process, it is important to submit all the necessary documents. If information is missing or mistakes are made, the decision can be delayed. To avoid this, it is a good idea to check in advance that everything is filled in correctly," advises M. Žukovas.

According to the Bank's representative, one of the most frequent mistakes faced by document assessors is the inaccurate filling in of financial data, which can have a significant impact on the accuracy of the application assessment.

„Errors in the preparation of financial statements are common – farmers do not always correctly state their assets or existing liabilities. For example, newly acquired machinery may not be classified as tangible assets and loans may not be accurately recorded. Such errors can affect the decision on compensation, as assessors lack accurate data on the farm's financial situation," says Mr Žukovas.

According to the bank's representative, these errors can be avoided by carefully following the established procedures for submitting documents and by cooperating with financial institutions, whose consultants can advise on how to submit the data correctly.

„Some financial institutions make it clear which information is to be provided by the farmer and which by his/her representative. This helps to avoid mistakes and simplifies the whole process. In the absence of such clear instructions, it is very important to check with the financial institution's advisors in advance. Accurate information will ensure that all the necessary data is submitted on time and correctly, and that the assessment of the application will go smoothly," advises M. Zhukovas.