Low cost loans deliver a positive for farming early 2017
The long awaited low cost loan scheme is finally here.
The low cost loan scheme has been talked about for more than a year and it seemed as if it wasn’t going to happen. All three major banks are now rolling it out across the country. AIB and BOI have being given €65 million each to give out to successful applicants and Ulster Bank has being given €25 million. Interest from farmers has being high and the actual number of applications is in the region of 20 million already.
So if this is something that is going to interest you and be of use to you on the farm get in to your local branch of your bank and talk to their dedicated agri-advisor sooner rather than later as its first come first served. In this blog I am going to explain what who is eligible and what can the money be drawn down for.
Borrowers must satisfy one of the following conditions by way of assigned self-declaration on the application form
- Is a current participant in a GLAS scheme
- Is a certified member of Bord Bia Quality Assurance scheme
- Is a member of a DAFM registered Farm Partnership
- A farmer who is a certified participant in financial training provided by Teagasc
Who can apply
Primary agriculture sector in the republic of Ireland and meets the eligibility criteria.
Forestry and equine as sole enterprise and aquaculture are not included.
Who cannot apply
- Someone in financial difficulty(excluding short term cash flow pressures)
- Is bankrupt or being wound up or having its affairs administered by the courts
- In the last 5 years entered into an arrangement with creditors
- In the context of being of bankrupt or wound
- Convicted of an offence
What can we use it
- Future working capital requirements(e.g. feed. Fertiliser. Trading stock, tax, other costs)
- As an alternative to merchant credit
- To replenish working capital already used prior to 31st of December 2016 to support capital expenditure.( e.g. if you bought a tractor or build sheds on the farm prior to this date out of your own cash flow then the money can be borrowed to replace this money)
- Loan amount of up to a maximum of €150,000 per farm operation.
- Loan term of minimum 1 year up to a maximum of 6 years
- Loan term will be determined by loan purpose
- Loans are unsecured
- Optional interest only repayments provided at the start of the loans
- Interest rate of 2.95% for the term of the loan
- No penalty for early paying off loan
- Other standard banking lending criteria, terms and conditions apply
How do I apply
Contact your local bank as soon as possible if this is something that interests you as I am told that the funds will run out If there is a big up take of this facility. They will get you to fill out the necessary application forms.
For farmers out there that have spent their own money on the farm in the past two years, this scheme could offer a great relief. If you have been struggling with merchant credit or stocking loans that have too high of an interest rate, this is a great chance to ease the pressure a little. In the case of previous capital investment this can be put out over a six year period which could give cash flow the break it needs.
For more information on this scheme, see the www.ifa.ie.