In order to ensure adequate incomes and living standards for its workforce, modern agriculture must be efficient, competitive, sustainable, and resilient. Achieving this requires consistent, flexible, and affordable access to external financing. Financial instruments (FIs) available under Pillar II of the Common Agricultural Policy (CAP) ’s Rural Development Programmes (RDPs) represent one potential source of such funding. However, despite their advantages, the implementation of FIs in Poland and other EU member states remains highly challenging. A key obstacle is the crowding out of alternative external financing sources by national and EU subsidies. This paper explores how FIs can be positioned within both theoretical and practical frameworks of agricultural financing to reduce excessive dependence on subsidies. The primary research method is a modified literature review. The analysis finds that, while FIs – particularly concessional loans – can help mitigate various shocks, they are unlikely to replace subsidies entirely. Instead, they are expected to function as complementary tools. Ultimately, financial instruments should be viewed as an additional, rather than alternative, source of funding for agriculture in the EU, including Poland.