A confidential finance scheme designed to benefit both lenders and borrowers has been launched by Anglia Farmers (AF) and is already proving popular with members.  The scheme, which was available from 15 May, provides a vehicle to enable lenders with surplus funds to lend to other members who require short term finance in order to purchase inputs through the AF Group.

According to Clarke Willis, AF chief executive: “In the current climate of low interest rates, investor members will receive a better return on their money as the interest rate for investors will be set above the market rate.  This rate will, however, be below the market rates normally available to borrowers making this a win/win situation for all participating members.”

The scheme, which has been headed up by AF board member George Bell, is being run through a wholly owned subsidiary company called AF Finance Limited and is a similar model to those being encouraged right now by the Bank of England.

Funds will be held for a fixed period of months and will be repaid on a fixed date.  All funds collected in this way will form part of a pooled fund which will be held on deposit to be lent to borrowers.

Lenders are able to enter the scheme at monthly intervals but are required to commit to lend from the time they enter until 15 January 2013.  AF Finance reserves the right to decline deposits if insufficient borrowers require funds.  Members may apply for an advance for any period from one month up to the number of months remaining until the end of the 2012 scheme.  The scheme will be run again starting in February 2013.

The return to lenders will depend on the amount of money advanced and the duration of the advance and is based on an attractive interest rate.  The interest rate to borrowers will be lower than rates normally available to borrowers making this a beneficial scheme for members looking for access to short term revolving credit.  AF Finance will receive a fee of 0.2% of the amount advanced to borrowers and an arrangement fee payable by the borrower.

“An independent structure has been established to ensure that any lending risk is carried by the lenders and not by the membership generally but AF’s knowledge of the borrowers’ trading patterns should minimise the risk to lenders” Clarke said.

AF Finance will check with AF that the borrower’s account has been operated in accordance with the AF rules in all material aspects and, providing the account is satisfactory, the advance will be credited to the borrower’s account.  The advance can be used to buy inputs through AF and for no other purpose.