Liquidity and loan opportunities in connection with project support
A loan promise may be needed when applying for support and a loan can facilitate the initial phase of a project.
WHEN APPLYING FOR PROJECT SUPPORT
In order to receive project support from Leader Gute, applying project owners must have liquidity that covers approximately 45% of the project's costs.
If the applicant project owner does not have sufficient assets of his own, a loan promise from a bank could be a possible solution when applying.
The project owner can investigate whether a bank is prepared to issue a loan promise for the application that is linked to either:
- Decision on prioritization of project support by Leader Gute's board
Or
- Decision on granted project support from the Swedish Board of Agriculture
AFTER PRIORITIZATION OR DECISION ON SUPPORT
Even if an applying project owner has sufficient liquidity at the time of application, a liquidity shortage may arise when the project is started.
The project owner can start the project at their own risk after prioritization from the Leader Gute board, or wait for a decision on support from the Swedish Board of Agriculture.
After prioritization by the Leader Gutes board, it can take several months before a decision on support is made by the Swedish Board of Agriculture. Only then can the project owner apply for payment – and it can then take a while before the payment is made.
It can therefore take a long time before payments are made, which can lead to a lack of liquidity in the initial phase of the project.
To avoid the risk of liquidity shortage, a project owner can, on their own initiative, apply for a loan from a bank, using either the priority from the Leader Gute board or the decision from the Swedish Board of Agriculture as collateral.
NOTE!
It is up to the applicant project owner to contact banks to discuss possible loan promises or loans linked to project support. This is not something Leader Gute gets involved in, but merely points out the possible possibility through this information.
FACTS: Liquidity requirements when applying for project support
Applying project owners must demonstrate in their application that they have the financial ability to implement the project.
Applicable associations:
The application must contain supporting documents in the form of bank statements, balance sheets and/or loan commitments that show that the association/organization can cover expenses equivalent to four months of the time for the intervention, which is approximately 45% of the project's budget.
Applicable companies:
The Swedish Board of Agriculture carries out a credit assessment via Creditsafe. In principle, the financial requirement is the same as for an applicant association (see above). If the credit assessment does not show financial ability to carry out the project, the application can be supplemented with a loan promise.