Farmers considering developing their businesses should tap into discounted loan rates from the Agricultural Mortgage Corporation (AMC), but must act quickly to ensure they secure a loan before the current rates expire, says Strutt & Parker's Land Management department.

AMC has negotiated access to a multi-million pound fund provided by the European Investment Bank (EIB) aimed at stimulating investment and job creation in small and medium sized businesses, including farming.

Local AMC agent, Alistair Cochrane in Strutt & Parker's Morpeth office, said: "This scheme provides an opportunity for farmers who are considering expanding or investing in improving farm efficiency to access favourable loan rates at a time when interest rates are already historically low. I see it as an important tool to help reduce the effects of price fluctuations and input cost volatility and mitigate the likely reduction in Single Payment income."

He said: "We have already seen a good level of interest and would encourage those farmers who want to make the most of the offer to get in touch with us as soon as possible to discuss their individual requirements. Funds available at the discounted rate are in limited supply so we suggest anyone interested should act sooner rather than later."

Mr Cochrane added: "The EIB scheme comes at an ideal time for cereal and other crop growers. Recent good crop receipts have given growers some confidence to invest in expanded facilities or more efficient systems.

"The range of investments the discounted funds can be used for is extensive and includes new or expanded grain, potato or other crop stores. Crop drying and handling systems are also eligible along with vegetable processing lines, the installation of a reservoir and irrigation infrastructure or undertaking field drainage schemes. The scheme also covers machinery purchases including combine harvesters and tractors."

He said the scheme was also important for livestock farming and dairy producers as the increasing demand for food to feed a growing global population has prompted some farmers to expand.

"From installing a new parlour to developing energy management infrastructure, there are numerous investments that this money can be used for," he said. "There is however some eligibility criteria that must be met and each case will need to be discussed with AMC on a proposal by proposal basis."

Those borrowers eligible for the EIB scheme will receive a significant discount of 0.65% off the normal loan margin. The minimum amount borrowers can apply for in the scheme is £25,500. The discount is available on loans of up to 10 years for projects that have a definite start and end date and the loans must be completed by December 2013.

"A wide range of projects fall within the scope of the scheme so it is worth considering how it could help strengthen your farm business for the long term," said Mr Cochrane. "With the demands to produce food for a growing population increasing, this funding offers a real financial boost at an important time for many farm businesses."

For more information please contact our Morpeth Land Management team on 01670 500871.

Example lending purposes
The following are examples of loan purposes that will qualify for the discounted rates. The range of loan purposes is wider than the examples shown so applicants need to check with the Agricultural Mortgage Corporation on a proposal by proposal basis.
• Buildings: general purpose shed; hay/straw storage; livestock housing; grain store; potato store; chicken sheds; milking parlours.
• Equipment: grain drying; robotic milking equipment; milking parlour equipment; chicken shed equipment; vegetable processing lines; milk processing equipment.
• Vehicles: tractors; combines; potato harvesters; lorries.
• Renewables: photovoltaic panels; wind turbines; water turbines; anaerobic digesters.
• Storage: reservoirs; slurry store.
• General: opening or expansion of a farm shop; orchard establishment; dairy cows; purchase of wholesale business (max €1 million); farm field draining; research and development.