The urgent need for the roll-out of the €2 billion Credit Guarantee Scheme has been highlighted by the Irish Farmers’ Association (IFA), which has cited the slow pace of government formation as a hindrance to the scheme.
Tim Cullinan, the association’s president, 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 [small and medium enterprises], including farming,” he added.
It is imperative that the low-cost Credit Guarantee Scheme is rolled out as soon as possible to address working capital needs in order to protect up-stream and down-stream 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,” the IFA president noted.
Meanwhile, IFA farm business chairperson Rose Mary McDonagh said, “The inclusion of primary agriculture, horticulture and aquaculture in the proposed 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.”
However, McDonagh added that the IFA was “still waiting to see the fine print” on the scheme.
Under the current proposals, the loan scheme will have a budget of €2 billion. It will be available on a first-come, first-serve basis. Eligibility is open to all farming sectors. Funds can be used for overdraft and working capital for terms up to six years.
“Loan amounts will range from €10,000 to €1 million. Depending on evolving economic circumstances, overdraft facilities can be termed out over a number of years,” McDonagh explained.
She added: “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.”
McDonagh further outlined: “An additional €200 million will be allocated to the Future Growth Loan Scheme – opening date yet to be announced – 40% of which will be available to farmers.
Other cash-flow schemes
Among the other cash-flow opportunities that farmers are eligible for, the IFA highlighted the €17 million that has been allocated for SME finance and leasing, which farmers can use for the purchase of second hand equipment and machinery, up to the value of €15,000.
Dairy farmers can still avail of loans through the MilkFlex scheme operated by participating co-ops. In addition, farmers can also apply for a Covid-19 business loan from Microfinance Ireland, the IFA noted.