Creed Launches Low Cost Loan Scheme for Farmers – Loans of up to €150,000, for up to 6 years, at interest rate of 2.95%, will be available this week through AIB, Bank of Ireland and Ulster Bank

-   Michael Creed TD

The Minister for Agriculture Food and the Marine, Michael Creed TD, today launched the Agriculture Cashflow Support Loan Scheme. The Scheme was developed in co-operation with the Strategic Banking Corporation of Ireland (SBCI), which has today confirmed that AIB, Bank of Ireland and Ulster Bank will distribute the loans, making €150 million available to farmers throughout Ireland at low-cost interest rate of 2.95%. This is supported by €25 million being provided by the Department of Agriculture, Food and the Marine, including €11 million in EU exceptional adjustment aid.

“One of my priorities is to address the impact of the change in the sterling exchange rate and lower commodity prices in some sectors which have caused cash flow difficulties for farmers. This innovative loan scheme will provide farmers with a low cost, flexible source of working capital. This will allow them to pay down more expensive forms of short-term debt, such as merchant credit or overdrafts, contributing to the ongoing financial sustainability of their farming enterprises” said Minister Creed.

This loan scheme forms part of a “three pillar strategy” in response to income volatility, which the Minister announced as part of Budget 2017.  Along with tax measures and farm payments, it will alleviate some of the pressures being caused by the recent market difficulties, which have been compounded by the uncertainty around Brexit.

The Minister thanked the SBCI and the participating financial institutions (AIB, Bank of Ireland and Ulster Bank), which will have the low cost loans available this week, “The SBCI has demonstrated its commitment to the agriculture sector and has worked with my Department to get this product to the market in a timely manner. I welcome the participation of the main banks, which will ensure nation-wide coverage for the scheme.  The fact that most farmers will have an existing relationship with the participating banks should facilitate the loan application process”.

 

Q&A

What are these loans for?

The Agriculture Cash Flow Support Loan Scheme was developed by the Department in co-operation with the Strategic Banking Corporation of Ireland (SBCI). It is a cash flow support facility, providing farmers with a low cost, flexible source of working capital and allowing them to pay down more expensive forms of short-term debt (e.g. merchant credit and overdrafts), ensuring the ongoing financial sustainability of viable farming enterprises. The loans may not be used for:

  • Refinance of existing term loans
  • The refinance of undertakings in financial difficulties (as opposed to cash flow difficulties, as defined in EU guidelines.)
  • New investments.

However, by using this facility and improving the cash flow position of their business, many will be in a better position to negotiate and restructure existing loan commitments.

Where and how can I apply for these loans?

AIB, Bank of Ireland and Ulster Bank will distribute these loans and further details are available in local branches and through their websites. Normal lending assessment criteria will apply although the loans will be ‘unsecured’ in nature, thereby facilitating a more straightforward application process. The loans will be dispersed on a “first come, first served” basis and will need to be allocated by late summer 2017 to comply with the requirements attaching to the EU funding.

Who can apply?

The loans will be available to all livestock farmers, tillage farmers, horticulture producers (including mushroom growers) and others involved in primary agricultural production (including poultry producers). To satisfy the requirements of the EU aid package, applicants will also need to satisfy at least one of the following eligibility criteria:

Application of environmental and climate friendly production methods:

  • Currently participate in an agri-environment scheme as part of Ireland’s current or last Rural Development Programme (i.e. GLAS, BDGP, AEOS, REPS, Organic Farming Scheme or a locally-led EU agri-environmental scheme).

Implementation of quality schemes or projects aiming at promoting quality and value added:

  • Currently a certified member of a Bord Bia Quality Assurance Scheme.
  • Currently a certified member of a Quality Assurance Scheme run by a co-operative, processor or producer representative body.

Implementation of cooperation projects:

  • Currently a member of a DAFM-registered Farm Partnership.

Training in financial instruments and risk management tools:

  • Have successfully completed or am participating in DAFM’s Knowledge Transfer Programme or previous programmes such as BTAP and STAP (and specifically, the financial management elements of those programmes)
  • Have participated in financial training given by Teagasc (including the Cash Flow module included in recent farm walks), and can produce a certificate to this effect.
  • Have participated in financial training from another body (e.g. co-operative, processor, farming organisation, producer representative body or other providers of training) relating to the eligible agricultural sectors, and can produce a certificate to this effect.

What size are the loans and what is the interest rate and terms?

The loans will be for amounts up to €150,000 for up to six years. The interest rate at 2.95% will represent a significant saving for farmers when compared with other forms of short term unsecured finance currently available. The loans will be flexible with interest only facilities of up to three years.

For further details: www.sbci.gov.ie

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