Agricultura y Desarrollo Rural

New guarantee fund to support investments in agri-food and forestry

New guarantee fund to support investments in agri-food and forestry

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New guarantee fund to support investments in agri-food and forestry

A new fund to help support investments in agriculture, food and forestry was launched on 23 February at an official ceremony in Toulouse, France. The so-called guarantee fund, supported by money from the European Agricultural Fund for Rural Development (EAFRD) and managed by the European Investment Fund (EIF), will channel €13.5m into the local economy by helping to guarantee loans offered to local agricultural, agri-food and forestry actors.

The financial instrument is part of the FOSTER TPE-PME initiative (FOnds de SouTien aux Entreprises Régionales), created by the French region Occitanie/Pyrénées-Méditerranée (the result of the recent merger of the Languedoc Roussillon and Midi-Pyrénées regions). The EIF has reached an agreement with the Banque Populaire du Sud (a regional bank) to implement the instrument.

The aim is that the EAFRD financial instrument managed by the EIF will help leverage a loan portfolio of €67.5m to be disbursed by the selected regional bank. The bank will be able to provide funding for small and medium-sized enterprises to invest in new projects in the broad food, farming and forestry sector throughout the Occitanie region. The guarantee fund will bring significant benefits for farmers and forestry entrepreneurs. Businesses wishing to borrow money for projects will be able to do so at reduced interest rates and with significantly lower collateral requirements than with traditional loans. Working capital (up to 30% of total eligible expenditure and linked and ancillary to the investment) will also be funded, supporting the sustainable growth of these businesses. One of the main objectives is the instrument to support riskier projects designed to stimulate the local economy.

FOSTER TPE-PME is a pilot project which became real after more than a year of studies and implementation, and thanks to an efficient collaboration between the managing authority, EIF and the Commission. It opens a new chapter in the collaboration between EIF and the EAFRD managing authorities. It also marks the operational launch of the first ever financial instrument managed by the EIF and using financing from the EAFRD. It is now the second operational EAFRD financial instrument in the EU for 2014-2020 (the first was launched in Estonia last year).

More information about financial instruments:

>>FI-compass website