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The operation will provide financing to agricultural small and medium-sized enterprises (SMEs) and mid-caps in Spain through Banco Santander, an intermediary specialised in this sector within the country.
The aim is to enhance access to finance for the target beneficiaries to support their small/medium projects.
The proposed transaction consists of an intermediated loan with Banco Santander, a financially solid promoter and repeat counterparty of the EIB. The operation will enable Santander to finance small and medium-sized investment projects in the agriculture sector carried out by SMEs and Midcaps enterprises operating in Spain.
The operation thus falls under the EIB's vertical Public Policy Goal (PPG) of "SME and Midcap financing" and horizontal PPG "Economic and Social Cohesion". Banco Santander commits to dedicate at least 10% of the loan amount to young and newly installed farmers.
The operation will address market weaknesses and failures related to the availability of financing for SMEs operating in the agriculture/bioeconomy sectors in Spain. For such SMEs, this project will ease the financial constraints that arise from information asymmetries caused by the lack of track record, insufficient farm net asset value to collateralize, as well as high screening costs for small investments. In addition, these projects address financial market inefficiencies caused by the fact that the economic life of an investment project exceeds the tenor of loans that are typically available on domestic capital markets.
The proposed operation falls within the scope of the EIB's Environmental and Social Standards - "Standard 11 Intermediated Finance". The Borrower / Financial Intermediary has adequate capacity, systems and processes in place for identifying, assessing, managing and monitoring environmental, climate and social (ECS) risks related to the potential sub-projects benefitting from EIB support. The Final beneficiaries will be required to comply with applicable national and EU legislation in respect of environmental and social matters, as appropriate.
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.