Low-cost Loan Scheme Needs to Be Rolled out Urgently
IFA President Tim Cullinan said the COVID-19 pandemic has caused unprecedented market disruption including market closure for many high-end food outlets and amenity horticultural products.
The resulting cash burn is unsustainable and threatens the viability of many SMEs including farming. It is imperative that the low-cost Credit Guarantee Scheme (CCGS) is rolled out as soon as possible to address working capital needs in order to protect upstream and downstream employment as well as the productive capacity of the agri-sector.
“The loan scheme cannot be rolled out until a new Government is in place. This is a real concern given the slow pace of the process,” he said.
IFA Farm Business Chairman Rose Mary McDonagh said, “The inclusion of primary agriculture, horticulture and aquaculture in the SBCI’s proposed Credit Guarantee Scheme loan scheme is a welcome development as it will address the accelerated and growing demand for increased working capital arising on many farms as a result of COVID-19”.
“We are still awaiting the fine print in relation to the scheme. Under the current proposals, the loan scheme will have a budget of €2bn. It will be available on a first-come, first-served basis. Eligibility is open to all farming sectors. Funds can be used for overdraft and working capital (term up to six years). Loan amounts will range from €10k to €1m. Depending on evolving economic circumstances, overdraft facilities can be termed out over a number of years. Application is made through the main banks. Interest rates, while not decided yet, will be less than current market rates. However, the price of the loan will reflect the cost of the State guarantee.”
“An additional €200m will be allocated to the Future Growth Loan Scheme (opening date yet to be announced), 40% of which will be available to farmers. A further €250m will be made available to SMEs through the SBCI Working Capital Scheme (not open to farmers).”
Ms McDonagh said, “A number of schemes are currently up and running. €17m has been allocated to SME Finance and Leasing, introducing much needed competition into this market. Farmers can use this finance for the purchase of 2nd hand equipment and machinery up to the value of €15k. Dairy farmers can still avail of loans through the MilkFlex scheme operated by participating co-ops. In addition, farmers can apply for a COVID Business loan from Microfinance Ireland”.