If you’re a small-scale farmer and want to grow your farming operation, chances are you’ll need to borrow money. Getting a loan is never easy, but now Land Bank is offering a new plan specially tailored for emerging farmers: the Retail Emerging Markets (REM) financing package. First of all, keep in mind that this is a business loan – it’s not a handout or welfare grant. You may only apply if:
- You farm full-time.
- You’re involved in primary agriculture, not the value-adding process.
- You can show that you’ve been unable to secure funding anywhere else.
The REM financing product is not for buying a farm – in other words, it’s not for a mortgage. If you want to buy a farm, you’ll need to approach the commercial division of the bank. Instead, you must already have access to land – in the form of a lease or Permission To Occupy (PTO), which will enable the bank to fund the operation. (Previously, a PTO wasn’t considered good enough collateral – or security – for a loan).
The REM loan is not available for long-term crops such as citrus. The bank prefers to fund crops that turn over two or three times a year, such as vegetables. This will allow you to receive several complete cycles of training in a year, and build up a balance sheet quickly. Ideally, you’ll repay the loan within five years and then move up to the commercial level of the bank.
There are three types of funding available:
- Funding to plant short-cycle crops.
- Funding for “medium-term facilities”, such as fencing, irrigation or boreholes.
- Funding an instalment sale for livestock or vehicles. This means that the bank loans you a lump sum to make the purchase and you pay the bank back in instalments.
Credit status
The REM loan is only for an individual, not a co-operative, and the individual is held liable for the loan. No more than R1 million may be borrowed, and credit checks are done on all applicants. If you’ve been blacklisted for non-payment of accounts, or are currently an unrehabilitated insolvent (in other words, you are not able to pay your debts), you will not be granted the REM loan. If you’re not sure about your credit status, check with a credit bureau beforehand – you are legally allowed one free check a year.
Proper Planning
To apply for the REM loan, you must give the bank a carefully prepared, realistic business plan with specific targets. In addition, you must agree to the bank deducting finance charges automatically from the loan. These charges will be set between 4% and 6% for the first year and will increase every year thereafter.
No cash will be deposited into your account. Instead, you’ll get a “buying card” to buy whatever you need. And here’s a very real advantage: Land Bank will give you technical and managerial support. Applications are now open.
Contact Land Bank on 0800 00 52 59.
Contact Susan Pletts at [email protected]. Please state “Emerge finance” in the subject line of your email. •FW
