Another key detail of low-cost loan scheme revealed

Another key detail of the Department of Agriculture’s low-cost loan scheme has been revealed by the Minister for Agriculture, Michael Creed.

Speaking at the 40th annual Irish Co-operative Organisation Society (ICOS) conference yesterday, the Minister said farmers can choose to go down the route of making interest-only repayments for the first three years of the six-year loan scheme.

Minister Creed said that a total fund of €150m is available under the scheme, with €25m being set aside for interest subsidisation and the guarantee of first losses.

We have a product now that will have a maximum loan draw down of €150,000 with an interest rate of 2.95%.

“It is far cheaper than anything that is already in the market place,” he said.

“This is a fund that is ring-fenced for the livestock sector and under de minimis it will also be available to tillage and mushroom sectors.

“Very shortly the Strategic Banking Corporation of Ireland (SBCI) will be making a call for financial institutions to partner in delivering this product to farmers.

“And since the announcement, I have spoken to the CEO’s of Bank of Ireland, AIB and Ulster Bank and they are all up for delivering this,” he said.

Interest rate will remain the same

Minister Creed also allayed fears that the interest rate applicable to the low-cost loan scheme would increase once banks became in charge of handling the fund.

The €25m is the cushion we have used to insure that the interest remains the same and I think that is critically important.

“This is not an invitation for farmers to borrow their way out of current difficulties.

“If you are paying high interest rates at the moment, through merchant credit or overdraft facilities, now is an opportune time to look at your cashflow and see how this might benefit you as an alternative form of cheaper finance.

“I know it will be used for on-farm investment in certain circumstances, but it is not an invitation to borrow your way out of difficulty,” he said.