24 Nov 2016
LOW COST LOAN FUND – YOUR QUESTIONS ANSWEREDFarm Business & Credit
A €150m low-cost loan fund for farmers was secured by IFA in Budget 2017. The scheme will be up and running in 2017 but here is what we know now.
How much will I be able to borrow?
Loans of up to €150,000 will be available for terms of up to six years.
How much will I pay?
The interest rate on loans from the €150m fund will be 2.95%. There is potential for interest-only payments for up to 3 years at the start of the loan period.
Who can avail of the loans?
The loans will be available to livestock, tillage and horticulture farmers.
As part of the qualification process, farmers will be required to be involved in one or more designated schemes, such as a QA scheme, GLAS, the Beef Data and Genomics Scheme, a Knowledge Transfer group, or in some form of financial management course from Teagasc or another provider. A full list of qualifying programmes will be available when the loans are formally announced.
The loans are primarily to support working capital on farms – e.g. to pay down expensive forms of credit, such as merchant credit and for other short-term financing facilities.
The loans may not be used for:
- Refinance of existing term loans.
- The refinance of undertakings in long-term financial difficulties (as opposed to cashflow difficulties).
- New investments (such as a farm building).
When will the loans be available?
The aim is for loans to be available from January. Loans must be drawn down by mid-2017.
How do I apply for a loan?
Application for loans is not yet open and no formal announcements have yet been made about administration or application, but the loans will most likely be delivered through main banks and normal lending criteria will apply.
Will security be required?
Security will not be required for these loans.
What is the SBCI?
The Strategic Banking Corporation of Ireland is the Government backed agency charged with sourcing lower cost funding (through the European Investment Bank for example) which can then be lent on to SMEs and farm businesses at lower rates than the banks are charging. In operation for about 2 years, the purpose of the SBCI is to increase competition in the Irish banking sector.