Agricultural subsidies: MBH Bank provides pre-financing for up to several years

Thanks to the product available in the form of factoring, MBH Bank’s Agricultural and Food Business Branch can provide support for one or two years in the case of subsidies belonging to the I. pillar of the Common Agricultural Policy of the European Union, and for the II. pillar, and in the case of normative subsidies that are part of the Rural Development Program, it can provide farmers with financing up to three years in advance. MBH Agricultural subsidies Factoring is currently available for 33 support rights, in addition to basic subsidies and production-related subsidies, including the Agricultural Environmental Management Program (AKG) and the Agro-ecological Program (AÖP). For the latter, the credit institution provides pre-financing at the rate of 75 or 80 percent, depending on whether the farmers request it for one or two years.

However, the amount of pre-financing for most types of support is 90 percent, the maturity is adjusted to the date of the expected payment of the support

“In the changed agricultural policy, legal and economic environment of the European Union, it is particularly important to help our customers with fast and efficient financing, and this service of ours also serves this purpose. At MBH Bank, we believe in the sector and trust in its future, and this is also guaranteed by the fact that we provide financing to agricultural enterprises for up to several years in advance through Agricultural Subsidy Factoring. This product can be of great help in maintaining the security of farming in the midst of often rapidly changing conditions,” said Dávid Hollósi, managing director of MBH Bank’s Agricultural and Food Business. He added that the possibility of pre-financing agricultural subsidies in the form of factoring may be of interest not only among smaller producers, but also among larger customers and those who have not previously used bank subsidy pre-financing. “MBH Agricultural Subsidies Factoring is one of the most easily accessible bank products for businesses operating in the sector,” said Dr. Tamás Molnár, managing director of MBH Bank’s Factoring and Business Financing Department. Farmers can conclude a framework agreement with the bank within days, after which the pre-financing can be quickly called upon at any time, either immediately after the framework agreement is concluded or later. “With a valid framework contract, if the withdrawal conditions are met, the amount will be on the customer’s account within days. The interest settlement is retrospective, and the farmers can decide whether to withdraw the entire amount or submit a request for pre-financing depending on the liquidity,” added Dr. Tamás Molnár, adding that, in addition to the simple, fast and flexible process, the additional advantages of the service include the free offer and evaluation, as well as the contract conclusion fee discount offered by the bank. In addition, there is no need for registration in a public document, annual review, or material collateral.

MBH Agricultural Subsidies Faktoring can be applied for in around forty Agricultural Centers of the credit institution throughout the country

What is new is that from now on farmers can apply for the product even before submitting the Unified Application, they do not have to wait for the applications to be submitted. The documentation is simple, takes only a little time and, if necessary, can be compiled locally, together with the bank’s colleagues experienced in agricultural financing. Another advantage is that the framework contract does not expire, and the bank will waive its annual fee in 2024. Anyone who signs this new framework agreement with MBH Bank this year will only have to count on two transparent fees in the case of a specific support pre-financing request: the disbursement commission and the interest. Regarding the latter, the bank offers an additional discount until September 30, 2024: no interest surcharge will be charged on top of the three-month BUBOR. In addition, the interest must be paid only when the Hungarian Treasury allocates the subsidy to the farmers, so the full amount of the pre-financing is available on the customer’s account even until the final payment date. In addition, customers are immediately notified of all transactions – disbursements, settlement – by e-mail.