The low-cost loan scheme is on course to open for applications by the end of January, a spokesperson for the Strategic Banking Corporation of Ireland (SBCI) confirmed to Agriland.
However, the spokesperson failed to identify the lenders who will operate the scheme, but it is envisaged that AIB, Bank of Ireland and Ulster Bank will be among the financial organisations selected to deliver the project.
Further details of the low-cost loan scheme or the Agriculture Cashflow Support Loan Scheme as it is called are expected to be made public in the near future.
A recent Agriland poll found that some 67% or two out of three farmers will apply to seek funding under the low-cost loan scheme.
The scheme, which was announced in Budget 2017, will allow farmers to borrow funds at an interest rate of 2.95%, while farmers can access unsecured loans up to a maximum of €150,000.
There can be ‘no delay’ in delivery
In late December, IFA President Joe Healy said it is critically important that the agri-cashflow loans are available for farmers in January of this year.
“There has been a hugely positive response from the farming sector to the announcement of these loans.
“And it is my belief that there will be strong demand for the loan fund, with farmers using the funding available to restructure their financial commitments and to access low-cost working capital,” he said.
Healy had written to the Minister for Agriculture, Michael Creed, making it clear that there there could be no delay in the delivery of the low-cost loan scheme.
Farmers will make their financial planning decisions early in the year, and it is critical that these loans are available as early as possible.
Farmers need to assess borrowing capacity
Meanwhile, farmers need to assess their borrowing capacity before applying to the new low-cost loans scheme, according to the ICSA’s Rural Development Chairman Seamus Sherlock.
Sherlock has called on farmers to be cautious if availing of the new 2.95% loan scheme.
The Rural Development Chairman said the ICSA welcomes low interest rates in general, but it is vitally important that farmers carefully assess their borrowing capacity.
“The new scheme is being promoted partly on the basis that the loans are unsecured.
While this may lead to a faster and more efficient approval process, farmers should not assume that they will be immune from making full repayments.
“Even in the case of an unsecured loan, banks are fully entitled to seek a court judgement which could be registered against the farmer’s assets,” he said.