The IIC established a partial credit guarantee program to guarantee rural loans to farmers originated and held by Rabobank Brasil. Each loan will be between $5 million and $10 million, of which Rabobank Brasil will retain up to $5 million, and the IIC will provide a partial credit guarantee for the remainder of the principal amount of the loan, with a maximum amount of up to $5 million each.
This partial credit guarantee will enable Rabobank Brasil to expand its volume of business by up to 50 percent allowing it to reach a greater number of farmers in Brazil. About five to ten farmers will form this portfolio with an average loan size of $8 million. The partial credit guarantee program provides a costeffective way for the IIC to support an innovative form of financing in the agricultural sector. Relying on a specialized financial institution in the agribusiness sector willing to share the risk of short-term lending initially to medium-size and large farmers in Brazil should provide a demonstration effect; the ultimate goal is to offer the same financing to smaller farmers in Brazil.
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