A lending scheme which helps to fund purchases of farm inputs has recorded loans of more than £1 million in its first year and returned interest of 5.05% APR equivalent to depositors.

AF Finance was launched in April 2012 to allow members of purchasing group Anglia Farmers (AF) to lend surplus funds to other members who require short-term finance to buy agricultural inputs through the group.

At the end of its first financial year, AF Finance has recorded total loans to members of £1,056,000.

As well as benefiting members who have been able to source finance to purchase new equipment and inputs through AF, the scheme has been successful for depositors, who will receive gross interest of 5.05% APR equivalent – a return which is considerably higher than the market rate. Members borrow at a rate of 6% per annum.

AF Group CEO Clarke Willis said: “At a time when the Government is calling for the establishment of a business bank to boost the provision of finance to small businesses, we’re delighted to be able to mark such a successful first year for AF Finance.

“We were aware that some of our members had surplus funds which weren’t earning them a vast amount of money while others were in need of revolving credit. That led to the creation of this peer-to-peer scheme which allows members to work with other members for mutual benefit.

“Being able to access un-secured crop credit means our members can buy their key inputs, such as animal feed, seed and fertiliser, when prices are at their most competitive.”

Building on the success of its first year, the scheme is now being extended for the next 12 months.

Mr Willis said: “We’ve proved that this model of borrowing and lending works. It has been a very flexible scheme for borrowers and we’ve had an excellent level of interest from depositors.

“While we can’t guarantee to replicate the numbers from our first year, we’re hopeful that the scheme will continue to grow for the benefit of both depositors and borrowers.”

AF Finance is a wholly-owned subsidiary of AF. The scheme is confidential for both borrowers and depositors.