The Irish Creamery Milk Suppliers’ Association (ICMSA) has said that that farmers looking for funding for their farm business should consider the Covid-19 Loan Scheme (CLS) announced this week by Tánaiste and enterprise minister, Leo Varadkar, finance minister, Paschal Donohoe and agriculture minister, Charlie McConalogue.
Chairperson of ICMSA’s Farm Business Committee, Shane O’Loughlin highlighted an interest rate of 3.75% on loans up to €250,000. Loans of between €25,000 and €1.5 million are available, with up to €500,000 available on an unsecured basis.
O’Loughlin said that very significant numbers of farmers are in the market for funding for liquidity and investment purposes.
“The interest rate available under this loan scheme is particularly attractive at present and applications will be considered for working capital, investment and also an element of restructuring,” the committee chair said.
“ICMSA thinks that farmers currently considering funding options should seriously look at this.”
On the broader question of competitive farm financing, O’Loughlin said that the announcement is welcome and is itself a “tacit recognition” by the government that the farm finance options being offered by commercial lenders were overly expensive.
Loan scheme and lending
O’Loughlin added that this loan scheme will set a benchmark for farmers and other small and medium-sized enterprises (SMEs).
“It’s noteworthy that the official announcement makes reference to the fact that the finance available on these loans is ‘competitively priced’ – and it very definitely is by comparison with what our commercial lenders are quoting Irish farmers,” O’Loughlin stated.
The much bigger question which ICMSA said it has raised repeatedly with everyone from the Central Bank downwards, is why ‘competitively priced’ farm finance is only available through special state-backed arrangements?
“Why are commercial banks and lenders in Ireland offering farm loans and finance so much more expensive than their continental counterparts?” the ICMSA chair has asked.
“We’ve asked this for a decade and have never received a meaningful answer. The government is aware of this surcharge because their own financing makes direct reference to the fact that it is ‘competitively priced’ by comparison with our banks.
“Maybe the government could ask the banks why they charge so much by comparison to continental banks?”