A new bridge loan scheme allowing farmers to access funding before receiving grants under the Common Agricultural Policy (CAP) will be introduced this year, Agriculture Minister Maria Panayiotou said on Thursday.

Speaking after a meeting with representatives of the banking sector, Panayiotou said the scheme would address a long-standing liquidity problem faced by farmers waiting for approved subsidies to be paid.

Farmers may lack the start-up capital to implement their intended investment. A bridge loan will help them through until the grant is paid out.

“For the first time, Cypriot producers have access to an integrated financial tool that provides a solution to a long-standing problem – the lack of liquidity needed to implement essential investments,” she said.

Two Cypriot lenders have agreed to participate. Panayiotou said the banks putting their signatures on the agreement is now a mere formality.

“The meeting we’ve had formally confirmed the participation in the financing tool of Bank of Cyprus and Eurobank, through the Association of Banks of Cyprus,” the minister said.

She added that strengthening the agricultural sector required both appropriate financial tools and faster procedures to provide farmers with greater financial security.

Eurobank general manager Fivos Stasopoulos described the initiative as an “important partnership” that would support investments aimed at improving the competitiveness and productivity of the agricultural sector.

He explained that the financing would cover the period between the implementation of an investment and the payment of the subsidy, providing farmers with the capital needed to proceed with their projects.

To access the scheme, farmers will first need to obtain approval for the relevant subsidy.

Those requiring additional liquidity may then apply to one of the participating banks for interim financing at preferential lending rates.

Once the subsidy is paid, it will be used to repay the bridge loan.

This funding is offered at a significantly lower borrowing cost than would otherwise be the case. Once the grant has been paid to the farmers, this amount will be used to repay the initial funding granted to the beneficiary.

Association of Cyprus Banks director general Marios Skandalis described the cooperation with the agriculture ministry as an “essential step” in the support of the primary sector.

He said that the new financial tools give farmers more flexibility and direct access to the resources they need to make more effective use of state funding.

According to the Association of Banks, interested farmers will be able to directly contact the banks participating in the financing scheme, which will include a preliminary check on the creditworthiness of the applicants.

It added that the disbursement of the funding would take place gradually, so as to cover both the initial phase of the start of the projects and the main phase of their implementation, during which the majority of the grants would be paid.

Bank of Cyprus retail banking director Theodosios Theodosiou expressed his satisfaction with the project and its support of the agricultural sector.

“The support of the rural world is a timeless commitment of the Bank of Cyprus, which recognises the contribution of farmers, farmers and producers to the economy, food sufficiency, regional development and the preservation of life in local communities,” he said.