Our FPO wants to buy produce from members and sell in bulk but we have no big capital. How do FPOs get credit?
How does an FPO get a working capital loan and is it easier than individual farmer loans?
SSanjay Deshmukh6mo ago · 171 views
7 Answers
🌾Farmer.in Krishi TeamExpert ✓6mo ago
An FPO borrows as a company against its business, its receivables and sometimes a credit guarantee, rather than against members' land. Lenders look at the FPO's registration, audited accounts, business plan, member base, the strength of its buyer tie-ups and the experience of its board and CEO. Working capital is often given as a cash credit limit sized to the procurement cycle, so the FPO can pay members on delivery and repay the bank when the pooled produce is sold. To make first-time lending easier there is a dedicated credit guarantee facility for FPOs that covers part of the lender's risk on collateral-free loans up to a ceiling, which helps young FPOs without assets. Strong record keeping and a clear marketing tie-up matter more than land. Ask your bank, NABARD or your Cluster Based Business Organisation about the current FPO loan products, the guarantee cover and eligibility.
PPravin6mo ago
Hamari FPO ko pehle bank ne mana kiya kyunki naya tha. Phir credit guarantee scheme ke through cash credit mila. Accounts saaf rakho aur buyer ka tie-up dikhao, kaam ho jata hai.
PPravin Deshmukh6mo ago
Hamari FPO ko pehle naya hone ki wajah se bank ne mana kiya tha. Phir credit guarantee scheme ke through cash credit limit mili. Accounts saaf rakho aur buyer ka tie-up dikhao, kaam ho jata hai.
DDatta Patil5mo ago
What helped our FPO was a clear procurement plan and a signed buyer agreement, the bank trusted the cash flow more than any asset. The CEO and board experience also mattered in the appraisal. Ask NABARD or your CBBO about the FPO credit guarantee cover.
BBhausaheb Gade5mo ago
Hamari FPO ko sabse zyada audited accounts aur GST return ne madad ki, kyunki bank ne pichhle saal ka turnover dekha. Pehle saal nuksan na dikhe isliye hisaab saaf rakho. Jo FPO time par ITR aur audit karwate hain unko cash credit jaldi milta hai. Apne CBBO se book keeping me madad maango.
RRavindra Shelke5mo ago
One practical point: our cash credit limit was sized to our procurement cycle, so the bank wanted to see how fast we pay members and how fast the buyer pays us. We shortened the gap by getting part payment from the buyer on delivery, which made the limit easier to justify. Show the lender a tight, realistic cash flow rather than a big optimistic plan, that built more trust.
PPrakash Jagtap5mo ago
A caution from our experience: the credit guarantee covers the lender, not you, so the FPO is still fully liable to repay and the directors signed personal undertakings. Read what you are signing and do not treat the guarantee as a free pass. Keep a reserve for the lean season so one slow buyer payment does not turn the cash credit overdue. Confirm the current guarantee terms with NABARD or your bank.