The low-cost loan scheme, also known as the Agri Cashflow Support Loan Scheme, will open by the end of January, the Minister for Agriculture, Michael Creed, confirmed this week.
The lenders who will operate the scheme have yet to be announced yet however it is believed that AIB, Bank of Ireland and Ulster Bank will all be included.
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.
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 purposes for which the loans may be used include:
- Working capital requirements.
- As a more sustainable alternative to short-term credit facilities.
- As an alternative to merchant credit.
The loans under the scheme cannot be used for any of the following:
- Refinance of existing term loans.
- The refinance of undertakings in financial difficulties (as opposed to cashflow difficulties; this is defined in EU guidelines.)
- New investments.
However, by improving the cashflow position of their business through use of this facility, many farmers will be in a better position to negotiate and restructure existing loan commitments.
The loans will be available to all livestock farmers, tillage farmers, horticulture producers and others involved in primary agricultural production.
To satisfy the requirements of the EU aid package, applicants will also need to satisfy certain eligibility criteria.