The Rural Credit Guarantee Foundation (Agrár-Vállalkozási Hitelgarancia Alapítvány, AVHGA) was established in 1991, within the framework of the PHARE programme in order to facilitate access to finance of micro, small and middle-sized enterprises by providing first call guarantees. The Founders were five banks (Agrobank Rt., Budapest Bank Rt., Magyar Hitelbank Rt., Mezőbank Rt., Országos Kereskedelmi és Hitelbank Rt.) and the Ministry for Agriculture.
Currently the Foundation is in relation with more than 150 financial institutions: commercial banks, mutual savings co-operatives, leasing and factoring firms, financial enterprises. Since 2008, the Foundation has been operating as a financial enterprise and since 2011, it has been functioning as a “financial enterprise corresponding to prudential regulation and equivalent to banks”.
In the first years of our operation the proportion of agricultural guarantees was higher thanks to the high number of subsidised schemes. After Hungary’s accession to the EU, the proportion of guarantees for rural development has been increasing due to the EU measures focusing on rural development.
For guarantee purposes, all activities relating to rural areas are considered as rural development area by the Foundation. The definition of rural area covers the whole territory of Hungary apart from Budapest and county towns. This criteria can be met either directly by the client, or its suppliers, buyers, employees or owners, as well.
The guarantees issued by the Foundation are counterguaranteed by the Hungarian State, the counter-guarantee rate was 70% until 30 of July 2011, and 85% since then.
In case a guarantee is provided at lower than the market price (which is controlled by the European Commission), the guarantee contains state aid element.
In addition to the guarantees based on the General Terms and Conditions the Foundation is able to provide special conditions based on specific agreements with partner banks.
The Foundation takes part in numerous loan programmes initiated by the Hungarian state, out of which the most important one is the guarantee to the Agro Széchenyi Card Credit Programme.