Agricultural Development Loans

For those who wish to acquire an existing agricultural property as a first-time buyer.


/ What are Agricultural Development loans?

Agricultural Development Loans are high-risk loans aimed at younger farmers with ambitions of acquiring and developing existing agricultural properties. The loan can cover the last part of the investment.

An Agricultural Development Loan is subordinated loan capital and is irredeemable by The Danish Growth Fund. Agricultural Development Loans are responsible loans, which will contribute to increase solidity.

The loan covers 15 pct. of the total purchase or investment amount - without deducting other funding. In some cases, the loan could be raised to finance up to 20 percent of the purchase / investment amount.

The Agricultural Development Loan is based on a co-operation with The Danish Banker’s Association and The Danish Agriculture & Food Council.

Agricultural Development Loans in brief

  • Agricultural Development Loans are for the purchase of agricultural properties for younger farmers.
  • Agricultural Development Loans have subordinate status in relation to other debt.
  • Agricultural Development Loans are responsible loans, which increases solidity.
  • The interest rate is 2-3 percent higher than the interest rate on senior bank loans.
  • An Agricultural Development Loan serves solely as a supplement to a complete financing solution, including financing from any financial institution. The loan is always given in combination with our other loans.

/ Who can apply?

Agricultural Development Loans are targeted first-time buyers of agricultural properties, usually up to 40 years old.

In order to be eligible for an Agricultural Development Loan, your farm must meet the following requirements:

  • The capacity to generate revenue and liquidity must be sufficient in terms of being able to pay off an Agricultural Development Loan.
  • You and your employees must have the relevant competencies.
  • Your owners’ equity must match the size of the Agricultural Development Loan.
  • The loan must be part of a combined financing solution, which in this manner improve access to further financing.

/ Price

The Danish Growth Fund runs a higher risk when providing Agricultural Development Loans. Accordingly, the required interest rate will be higher. An Agricultural Development Loan must therefore be considered equivalent to the conditions associated with equity financing.

However, the co-operation with The Danish Bankers’ Association and The Danish Agriculture & Food Council provides The Danish Growth Fund with risk coverage to a certain extent. This means that you pay a lower interest rate compared to the usual cost of subordinated loan capital. The interest rate on Agricultural Development Loans is typically 2-3 percent higher compared to senior loans. When the loan is combined with a regular loan from The Danish Growth Fund, the interest rate on the two loans will be identical.

Terms and conditions

The general interest and loan repayment conditions:

  • variable base rate of three months CIBOR + interest rate margin, reflecting the presumed risk
  • An initial charge of DKK 40,000 + 0.5 pct. of the total loan amount.
  • The Agricultural Development Loan is irredeemable by The Danish Growth Fund.

/ Process

If you want to apply or learn more about Agricultural Development Loans, please contact one of our advisors. The contact information can be found in the side boxes.

The loans are supported by the COSME Guarantees Facility, with the financial backing of the European Fund for Strategic Investments, Investment Plan for Europe. The purpose of EFSI is to support and implement productive investments in Europe as well as facilitate the access to financing for companies.