New low-cost loan scheme for farmers scheduled for second half of 2018
A new low-cost loan scheme is scheduled to be up and running in the second half of 2018, the Minister for Agriculture, Food and the Marine, Michael Creed, confirmed.
He made the comments at the Irish Farmers’ Association’s (IFA’s) Annual General Meeting (AGM) yesterday during his opening address.
The minister outlined that the previous scheme – the €150 million Agriculture Cashflow Support Loan Scheme – was a success and that the department intended to build on that.
As well as this, he explained that a Brexit Loan Scheme for small and medium-sized enterprises (SMEs) would be rolled out in the first quarter of this year.Also Read: All you need to know about the €300 million Brexit Loan Scheme
“In conjunction with the Department of Business, Enterprise and Innovation – we have put together a new €300 million loan fund, 40% of which is ring-fenced for the [agri-food SME] sector,” the minister said.
But, due to state-aid rules, the scheme will not be available to farmers and fishermen.
However, the department has also secured a fund of €25 million, which will leverage a loan scheme that hasn’t been quantified as yet.
Continuing, Minister Creed said: “€25 million did secure the €150 million previously for farming loans; but, €25 million has leveraged €300 million for the SME sector. But, that’s on the basis that it is a three-year scheme and the interest rate is at 4% rather than 2.9%.
So, we want to learn the lessons of the €150 million loan scheme. It will be the second half of the year before we have the details of that new loan [scheme] for farmers and fishermen up and running.
The average loan size drawn down under last year’s low-cost loan scheme for farmers was just shy of €34,000, according to the Strategic Banking Corporation of Ireland (SBCI).
A clear timeline on the roll-out of the low-cost loan scheme for farmers has been called for by the new chairperson of the Irish Creamery Milk Suppliers Association’s (ICMSA’s) Farm Business Committee, Shane O’Loughlin.
Farmers are currently making their projections and financial plans for the coming year, as well as 2019/20 – and a key part of this planning is the availability of credit at a reasonable rate, he said.
The first issue for ICMSA is that this tranche of loans must go to those who are most deserving of this specifically low-cost option – and not just those who get in quickest on the ‘first-past-the-post’ system that was applied last year, despite our criticism.
“Many of those who most needed that credit last year either failed to get it or were too late, as it took time to put the necessary documentation together,” O’Loughlin said.
He added: “The second issue arises around the constant and long-term problem of funding being made available at competitive, realistic, interest rates within Irish credit institutions.
“Farmers are asking – certainly ICMSA is asking – why ‘low-cost loans’ in Ireland are made available at interest rates that are still well above those being charged by mainland European banks on their farm loans.
“Let’s get the loans ready and deliberately focus them on the farmers who need them – not who can get the paperwork in fastest – and then start looking at medium and long-term farm financing at the kind of rates that the mainland EU banks charge and on which they seem to be able to make a margin,” he concluded.