Agriculture - Government-backed loans: research

Recommendations

1. Address data gaps

a. Better understand the demographics of young/new entrant farmers and crofters in Scotland that are unable to access current finance options and determine the purpose and demand that any new product would have. European countries with government-backed loan schemes including the examples in this report could be approached for data on uptake levels and administration costs of schemes to determine the critical success factors.

2. Increase awareness and education of agricultural banking

a. Explore awareness of current finance available to the agricultural sector and identify where current products/schemes could be marketed better to farmers and crofters and through which channels.

b. Explore whether improved financial education programmes could be created to support new/young entrants in accessing finance; this could include support to create robust (medium-to-long-term) business plans that are often necessary to successfully access bank loans.

3. Creation of new schemes

a. Create a task and finish group and/or an international knowledge exchange network and events to explore government-backed loans and alternatives. These could also look at a wider strategic approach, such as those operating in other EU countries. Ideally, these task and finish groups would include a range of industry representatives, including farmers and crofters, bankers, those providing alternative finance such as stock finance and people involved in similar schemes in other countries.

b. Further investigate the use of existing frameworks, schemes, products and finance, as this could be a cheaper, timelier and tested approach. Explore the EU model in more detail, including the EU’s intention to make available a range of financial measures in a ‘Starter Pack’ to support young/new entrants for the upcoming CAP 2028-2034 programme. Increasing the awareness of this approach to the task and finish group is also necessary.

c. Examine the Republic of Ireland’s Future Growth Loan Scheme and Growth and Sustainability Loan Schemes in more detail, as these provide examples of government-backed loan schemes open to businesses in different sectors of the economy, which have been successful in achieving high uptake from farmers, although not tailored specifically towards young/new entrant farmers.

Appendix 1: Comparison of government-backed loan schemes in the UK and in European countries

Loan Scheme and dates of operation: Small Firms Loan Guarantee Scheme (SFLGS): 1981 - 2009

Country:

UK

Target group:

Small and Medium Enterprises (SMEs)

Purpose:

Supported access to debt finance for SMEs with credible business plans but without an established track record, or lacking security for debts^[81].

Loan amount, term, guarantee as a percentage and lender role:

£250,000 loans with a term of up to 10 years. 75% government guarantee⁷⁰. A number of participating lenders involved. Capital for Enterprise, a non-Departmental Public Body was set up to operate the scheme from 1 April 2008.^[82] Borrowing businesses paid 2% of the outstanding loan balance, quarterly, as an annual premium to the Department for Business, Innovation and Skills.

Evaluation of scheme impacts and uptake:

Limited information publicly available on sector or industry breakdowns. A 2004 UK Government Select Committee on Public Accounts reported around 36 loans in 2003-2004 were provided to agricultural businesses^[83], demonstrating a small number of agricultural businesses supported by the scheme.

Loan Scheme and dates of operation: Enterprise Finance Guarantee (EFG): 2009 – 2020

Country:

UK

Target group:

SMEs

Purpose:

Launched as a result of the 2008 financial crisis^[84]. Scheme aimed at SMEs to assist with their access to finance. SME’s required to lack security for a lender’s usual requirements but have a sound business proposal¹¹.

Loan amount, term, guarantee as a percentage and lender role:

Primary agriculture production activities subject to a maximum ‘grant equivalent’ value of €7,500 with a corresponding maximum loan value of £50,000^[85]. Terms between 3 months and 10 years for loans and asset finance, with a 3-year term for revolving facilities and invoice finance^[86]. 75% government-backed guarantee. Similar to the SFLGS, businesses paid a 2% annual premium on the outstanding capital balance of the loan (funding part of the cost of delivering the guarantee) whilst interest rates and further fees and charges were a commercial matter decided by the relevant lenders.^[87]

Evaluation of scheme impacts and uptake:

Over £35bn to more than 37,000 SMEs. EFG lending by sector data published by the British Business Bank over the period January 2009 – December 2019 details 197 loans offered to businesses in agriculture, forestry and fishing across the UK, representing 0.5% of all loans offered by the EFG scheme.^[88]

Loan Scheme and dates of operation: Recovery Loan Scheme (Iterations 1 and 2): April 2021 – June 2022

Country:

UK

Target group:

SMEs

Purpose:

Supporting sustainable recovery after Covid-19, assisting with access to finance and growth^[89].

Loan amount, term, guarantee as a percentage and lender role:

£25,001 - £2 million for term loans/overdrafts with terms of up to 6 years. £1,000 - £1 million for invoice or asset finance with terms of up to 3 years.^[90] 80% government-backed guarantee for loans issued prior to 1 January 2022, 70% for loans issued after this date²². Lenders made decisions on providing facilities, carried out credit and fraud checks^[91].

Evaluation of scheme impacts and uptake:

June 2025 figures detailed 223 facilities drawn by the agriculture, forestry and fishing sector (1.1% out of all sectors) to a value of £23.29m^15.

Loan Scheme and dates of operation: Growth Guarantee Scheme (GGS): 1 July 2024 – present

Country:

UK

Target group:

SMEs

Purpose:

Access to finance for investment and growth.

Loan amount, term, guarantee as a percentage and lender role:

70% government-backed guarantee^[92], with up to £2m able to be borrowed. Maximum facility cap of £110,000 for farming businesses (primary production agriculture).^[93] Term lengths between three months and six years¹⁷. Variable interest rates set by lenders, dependent on individual lending proposals, the government guarantee and the fee that a lender pays for the guarantee.¹⁷ Operated by the British Business Bank using accredited lenders: 55 listed on the British Business Bank’s website)^[94].

Evaluation of scheme impacts and uptake:

Figures for 31 December 2024 detailed 314 facilities provided to SMEs in the agriculture, forestry and fishing sector, with a drawn value (total value of facilities drawn down by borrowers) of £31.50m out of a total drawn value for all SIC groups of approximately £2.11bn, giving the sector an approximate 1.5% share of the drawn value of facilities. Nationally by the end of 2024 804 facilities (across all sectors in Scotland) had been supported, at a rate of 22.65 facilities per 10,000 SME’s. These figures include loans under the Recovery Loan Scheme Iteration 3 (therefore loans from 1 August 2022) which was renamed the Growth Guarantee Scheme on launch in July 2024.^[95]

Loan Scheme and dates of operation: Agriculture Cash Flow Support Scheme: January 2017 – September 2017

Country:

Republic of Ireland

Target group:

SMEs – agricultural businesses

Purpose:

To support farmers with challenges related to Brexit, including a weaker Sterling and reduced commodity prices.

Loan amount, term, guarantee as a percentage and lender role:

Unsecured loans to a maximum of €150,000 with a 6 year term and a fixed interest rate of 2.95%. Funded by Irish Government, with a guarantee from Strategic Banking Corporation of Ireland (SBCI) and an EIF counter-guarantee under the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME).

Evaluation of scheme impacts and uptake:

By December 2017, 4,246 SMEs had been supported through the scheme through €145m of loans, with the average loan being €34,130^[96].

Loan Scheme and dates of operation: Future Growth Loan Scheme: 2019 - 2023

Country:

Republic of Ireland

Target group:

SMEs, small mid-caps and businesses in the primary agriculture and seafood sectors.

Purpose:

Access to funding for strategic long-term investment^[97].

Loan amount, term, guarantee as a percentage and lender role:

Loans between €50,000 and €3million with terms of 8-10 years. Uncapped counter-guarantee to the SBCI. Irish Government, EIB and EIF covered portions of any losses. Initial maximum interest rates were 3.5% on loans over €249,999 and 4.5% on loans under €250,000.

Evaluation of scheme impacts and uptake:

Findings from 2023^[98] detailed a total of 1,190 loans (valued at €523,706,000) between 2019-2022, with only 43 defaulting (total value of €3,792,000).

Loan Scheme and dates of operation: Growth and Sustainability Loan Scheme (GSLS): November 2023 – June 2026 (or earlier if fully subscribed)

Country:

Republic of Ireland

Target group:

SMEs – faming, fishing and small mid-cap businesses

Purpose:

Developed for SMEs, 30% of loans intended for environmental sustainability and 70% for investments that increase competitiveness and productivity. Designed for long-term investments for business growth and resilience.

Loan amount, term, guarantee as a percentage and lender role:

a 64% guarantee on loans to €500,000 over a 7–10-year period in addition to “selective interest rates”³⁴. Loans available under the scheme range from €25,000 to €3,000,000,

Evaluation of scheme impacts and uptake:

A Strategic Banking Corporation of Ireland quarterly report of the GSLS as at 30^th September 2025 details 71% of 1,862 drawn loans with an interest rate of <5% and 3% with an interest rate of >10%^[99]. fi-compass reported ‘strong uptake’ of the GSLS by mid-2024, with 1,000 loans approved to a total of over €170 million^[100].

Loan Scheme and dates of operation: The Initiative Nationale pour l’Agriculture Francaise (The French National Agricultural Initiative): Phase 1 2019, Phase 2 2025 – 2028

Country:

France

Target group:

Young farmers

Purpose:

Improved access to debt finance for young farmers in France.

Loan amount, term, guarantee as a percentage and lender role:

As at February 2021, the average loan amount issued was €131,000^[101]. Four financial intermediaries providing loans with an 80% maximum counter guarantee. The guarantee was valid for 10 years, although loans could have a longer maturity.

Evaluation of scheme impacts and uptake:

A second phase, due to the success of the first phase, extending the scheme to 2028, is anticipated to lead the scheme to have reached over 15,000 farmers.

Loan Scheme and dates of operation: Generazione Terra: 2023 - 2024

Country:

Italy

Target group:

Young farmers

Purpose:

Public financial institution The Istituto di Servizi per il Mercato Agricolo Alimentare (ISMEA) – Institute of Services for the Agricultural Food Market - provides long-term finance for the purchase of agricultural land for young farmers in Italy.

Loan amount, term, guarantee as a percentage and lender role:

Applicants can either obtain a loan to pay back over 15-30 years where ISMEA buys the land and retains the title until repaid or take out a mortgage to buy the land. Fixed interest rate for the duration of the loan, components including a 0.05% admin cost, the EU base rate prior to signing the contract and the applicant’s credit risk spread (0.60% - 2.20%).

Evaluation of scheme impacts and uptake:

Little publicly available information online.

Loan Scheme and dates of operation: Linea ICO-MAPA-SAECA (Instituto de Crédito Oficial – Ministerio de Agricultura, Pesca y Alimentación - Sociedad Anónima Estatal de Caución Agraria): 2022 (first call) 2024 - 2027 the Jovenes ‘Youth Line’ call opened.

Country:

Spain

Target group:

Farmers, second funding call specifically for young farmers.

Purpose:

Loan scheme for farmers where they are experiencing exceptional circumstances, i.e. extreme weather conditions, the supply of raw materials being seriously disrupted due to global market conditions and health or food crises. A later call using the same framework was launched in 2024 and open specifically to young farmers aged 41 and under to facilitate access to finance.

Loan amount, term, guarantee as a percentage and lender role:

Loans of up to €400,000 available for individuals or sole traders and up to €600,000 for companies/legal entities. Loan terms are up to 15 years, with potential grace periods of between 1 and 3 years. There is a 15% subsidy on the principal amount of the loan, up to a maximum of €15,000 and the cost of the guarantee is subsidised for the first 6 years of the loan term. ICO, Spain’s state-owned bank, provides loans The guarantee is provided by SAECA - Spain’s State-owned Agricultural Guarantee Corporation^[102].

Evaluation of scheme impacts and uptake:

For the 2025 financial year, the Spanish Ministry of Agriculture, Fisheries and Food reported that 1,667 guarantees were issued (€123.1 million). 97% were provided to young farmers.^[103]

Loan Scheme and dates of operation: Establishment of Young Farmers’ measure: 2023-2027

Country:

Lithuania

Target group:

Young farmers

Purpose:

Support for young farmers/new entrants establishing their business (within first two years).

Loan amount, term, guarantee as a percentage and lender role:

Young farmers can apply for preferential loans as well as grants, or a combination of both – up to a combined maximum of €100,000. Loans can have a 5 year maximum term. Interest is paid on the financial intermediary part of the loan (which is not less than 40%), with rates based on market conditions. ^[104]

Evaluation of scheme impacts and uptake:

Little publicly available information published online.

Loan Scheme and dates of operation: Vermogensversterkend Krediet (VVK): January 2020 -

Country:

Netherlands

Target group:

Young farmers

Purpose:

Generational renewal - targeting young farmer successors of family businesses.

Loan amount, term, guarantee as a percentage and lender role:

Loans of up to €2.5 million, guarantee on 2/3 of the loan amount with the government guaranteeing 90% of the guaranteed amount.

Evaluation of scheme impacts and uptake:

Only 6 applicants in the first two years of the scheme. An interim evaluation found it did not effectively meet farmer needs, with wider issues around unclear government policy direction and farm profitability concerns that the scheme did not help to address.^[105][106]

Appendix 2: Semi-structured interview script

Interview script for government backed finance for new/young entrants.

All stakeholders

Introduce myself - Double check consent and ask if interviewee has any questions.

1. Can you tell me about yourself and your interest/involvement in agricultural finance?

In finance

Young farmer

stakeholder

2. Do you have a product(s) aimed at new entrants/young farmers?

If yes: can you tell me more about these products?

Eligibility

interest rates, timeframes, how much can be borrowed, timeframes

what countries does this apply to?

Who underpins lending

3. Have you a need for agricultural finance?

Can you tell me about your experiences in securing finance? Is this different as a new entrant?

4. Why do you think such products are required?

Do you think agriculture needs specialist loans? If yes, why? What makes agriculture different to other SMEs?

5. Who do you think should provide these products?

Loans, public, private?

6. There have been suggestions that the Scottish Government should back loans for new entrants. What do you think of this proposal?

Benefits, is this their role?

7. What do you think are the main challenges of government-backed loans?

For the government and for others

8. Do you have any suggestions about how these could be overcome?

9. Do you know of any examples of private or public finance for new entrants?

10. Do you have any other comments/opinions on this topic?