It is widely expected that this week will see the Strategic Banking Corporation of Ireland (SBCI) announce which banks and other lending institutions have been accepted to deliver the €150m low-cost loan scheme for farmers.
The measure, which will make money available to producers at an annual interest rate of 2.95%, will go green before the end of January.
It is envisaged that AIB, Bank of Ireland and Ulster Bank will be among the finance organisations selected to deliver the project – the Agriculture Cashflow Support Loan Scheme.
An SBCI source said the money will be made available to farmers to fund working capital requirements.
It cannot be used to fund the acquisition of land or the construction of new buildings. Farmers can draw down up to €150,000 on an unsecured basis.
“Repayments options will be flexible. For example, farmers can opt to look at an interest-free option for up to three years with the capital and remaining interest payments kicking in thereafter. The actual interest rate paid by farmers will be 2.95%.
“The Scheme aims to support farmers experiencing short-term financial pressure due to price and income volatility.
“The loans will enable farmers to plan and budget more effectively by providing an attractive cash flow support loan product as an alternative to more expensive forms of credit such as merchant credit and bank overdraft facilities.”
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However, the envisaged delivery banks are making it clear that SBCI must clarify what is meant by ‘working capital’ within the terms of the new scheme. Clarification will also be required on how the measure will be guaranteed by SBCI, given that the loans will be made available to farmers on an unsecured basis.
AIB confirmed that it is a strong supporter of the agri-sector and is actively backing the new finance scheme.
A spokesperson for the bank said AIB has a history of partnership with the SBCI, helping small businesses and farmers to grow their businesses, create employment and support the economy through reduced priced loans
“AIB has submitted an expression of interest to take a proportion of the funding to support customers. We are actively engaging with SBCI to agree the finer details of the scheme and we are working closely to enable delivery.”
Bank of Ireland has also confirmed its strong interest in the new scheme. Find out if you qualify for the low-cost loan scheme here