Peer-to-peer lending can fill grant funds payment gap

A peer-to-peer lending company says it can help farmers who want to apply for grant support to help them diversify or get more efficient, but who don’t have the cash to pay for the project upfront.

Cornwall-based Folk2Folk says it is aware that some farmers are not applying for Leader grant support (see box below) because they do not have the initial finance to get their project going.

Ian Bell, head of farm and rural engagement at Folk2Folk, said Leader funding was a great opportunity for farmers, but the fact the money could only be claimed in arrears was a huge barrier to potential grant recipients.

See also: 5 successful Leader grant projects to inspire farmers

“Applicants must be able to pay for their project initially, as grant payments will only be made once the work being claimed for has been completed and paid for,” he said.

“This leaves a gap where potential recipients with fantastic projects are unable to apply for the grant because they can’t pay for the project upfront, and this is where Folk2Folk may be able to assist.”

Loan details

The business, which was formed in 2013, seeks to match local businesses with investors who will benefit from the 6.5% annual interest rate payable on any money they loan.

Businesses can apply for a business loan of a minimum of £50,000 for a maximum period of five years.

The loan must be secured against land or property.

To date, more than £190m has been invested, with rural, local and farming businesses using it as a platform to secure finance for growth, development and diversification.

The company has developed so it now has a local presence in Cheshire, Cornwall, Cumbria, Devon, Dorset, East Anglia, Somerset, Thames Valley, Three Counties, Worcestershire and Yorkshire.

Leader funding

Leader funding is part of the Rural Development Programme and aims to create jobs and deliver growth in the rural economy.

Grants are available to farmers to increase farm productivity, assist with farm diversification and to boost rural tourism.

The maximum grant rate is typically capped at 40% of the eligible project costs, with the maximum grant on offer tending to range between £35,000 and £50,000.

The scheme is competitive, so whether an application is successful will depend on a range of criteria, including whether it offers the public good value for money.

Applicants need to apply to their Local Action Group (LAG) and each LAG decides at a regional level how best to spend the money they have on offer.

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