Financing helps the modern economy stay competitive

Farming requires not only special knowledge and work, but also a stable financial situation. However, it is not so easy to obtain external financing if you are faced with the problem of collateral. In such cases, individual guarantees can help to secure funds.

Helped ensure business success

The main activity of „Sparnai", an agricultural company operating in Zarasai for more than six decades, is poultry farming. 20 years ago, the farm was the first in Lithuania to introduce an innovation on the market – to raise hens on litter. As the business expanded, additional egg-dominated products were introduced, ranging from forked bread, pasta and a variety of cakes.

According to the company's director, Dainius Spirikavičius, today the farm collects around 100,000 eggs every day, which is why it is crucial to ensure smooth processes, which requires constant renewal. The company's latest solution – an investment project to renovate the equipment of four poultry houses.

„Our company's main objective – quality production, which requires the latest technology. A loan with ILTE guarantee is a great help for every farm, because to remain competitive in this world of evolving technology, it is necessary to modernise production. The process of obtaining the guarantee was quick and smooth, and the bank responded positively," says Spirikavičius.

In order to obtain financing for an investment project, the manager of the agricultural company „Sparnai" first contacted the National Paying Agency to find out about the possibility of receiving support. Once approved, he contacted a financial institution which, after assessing the company's borrowing capacity, estimated the amount of the missing collateral and applied to ILTE for an individual guarantee. ILTE provided an 80% guarantee on the loan, which in the case of this project is equivalent to EUR 600 000.

Mostly positive response

Giedrė Gečiauskienė, Head of Clients and Financing Solutions and Member of the Board of the National Development Bank ILTE, says that in the last year, 461 individual agricultural guarantees were granted, with a total value of EUR 43.3 million. She stresses that the guarantees make it easier for farmers to borrow not only for investments but also for working capital: seeds, fertilisers, fuel. However, it is important to pay attention to a number of key aspects in order to secure guaranteed finance.

„To take advantage of an individual guarantee, it is important for clients to keep double-entry books: financial debts must not be higher than assets and future activities must be realistically forecast. For investment projects, clients must invest at least 10% of their own funds in the project. It is important to know that EU support funds are not classified as own funds", – insights shared by G. Gečiauskienė.

G. According to Gečiauskienė, more than 97% of those who apply for a guarantee receive a positive answer, so it is worth not missing this opportunity and submitting the necessary documents.

„The service is open to customers who have been engaged in agricultural activity for at least 1 year and have generated income for this period. We do not provide a guarantee if we identify a higher level of risk after the client's risk assessment – for example, the company is subject to international sanctions or we see the possibility of bankruptcy", – says G. Gečiauskienė.

ILTE's representative said that guarantees provide more opportunities to borrow on easier terms, which contributes to increasing investment in agriculture.