Citadele Bank

EU Funds Offer Chance to Implement Most Considered and Sustainable Projects: Prepare in Time!

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Latvian farmers should think about possible plans in terms of how best to use financing from the European Union’s 2014-2020 funding plans, doing so as quickly as possible.

“Agricultural lending is one of the Citadele Bank’s priorities, and during the previous planning period, Citadele offered all kinds of loans to farmers so as to facilitate growth in the sector and provide co-financing for European Union funds,” says the director of the Citadele SME Services Division, Jeļena Smoļska. “At the end of this year, Latvian businesspeople are farmers are starting to think about financing programmes during the 2014-2020 planning period, and they should know about those EU-supported projects that will require co-financing from the bank. Our recommendation is that our clients think about the necessary sums of financing from the funds and the bank in a timely manner. People should consult with our specialists, who will propose the best financing model for each specific situation.”

Practical recommendations on preparing for financing

The following issues must be considered in preparation for the EU’s 2014-2020 planning period:

  • Preparation of a strategy of operations;
  • Preparation of a detailed business plan;
  • Planning of ongoing cash flow and revenues;
  • Decisions on the financing structure of the planned project – how much the planner will invest, how much financing the bank will provide, and how much money will be available from the EU.

It will always be useful to contact the bank’s specialists for consultations. In preparing applications for the Rural Support Service, grant applicants should:

  • Think not only about everyday partners such as providers of raw materials and retailers, but also about the bank so as to agree on partnership terms in a timely way;
  • Carefully examine the market to make sure that the intended goods and services will have a sales market, also think about why one’s products and services are better than those of competitors.

A good example of EU financing: The Kaupēri farm in the Madona Administrative District
Just a bit more work, and the Kaupēri farm in the Madona Administrative District will have a new cattle shed with 50 dairy cows. Co-financing from the ELFLA programme of the European Union and a loan from the Citadele Bank allowed the Jubelis family to fully modernise the farm that they established in the early 1990s. The new shed, storage facilities for manure, installation of an artesian well, and purchase of milking equipment required an investment of LVL 150,000, and the farm has already repaid nearly one-half of the loan. Manager Gundega Jubele says that the family is proud of what it has done, because today it takes only 90 minutes each morning and 90 minutes each evening to milk 30 cows and tend to 17 calves. The farm hopes to take out another loan to buy an automated feeding system, thus making life even easier for the family. Kaupēri is a biological farm, and it will certainly continue to develop. Gundega and husband Juris laid the foundations for the dairy operations, and now management of the farm has officially been taken over by their 25-year-old son, Andris Jubelis.

The family began thinking about a now cattle shed in 2011, and the Rural Support Service confirmed that the farm satisfied all requirements for EU co-financing. Gundega Jubele laughs in saying that it took longer to find co-financing for the loan than it did to build the shed itself. Several lending institutions refused a loan, and it was Citadele that gave the green light. Then things happened swiftly. Negotiations with Citadele began in December 2011, and work on the shed began in May 2012. That is why Gundega recommends that farmers be relentless and self-confident in convincing a bank of the viability of the intended project, proving that they will be able to repay the loan. Kaupēri received 70% co-financing from the European Union. From the very beginning, it has sold its milk to the AZ Lazdonas Piensaimnieks dairy, which pays a good price for the milk and never misses payment. This, too, provides the financial stability that is necessary for the farm’s ongoing development, Gundega says.

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