‘Strong demand’ for €150m low-cost loan scheme

There has been a strong demand for the €150m low-cost loan scheme, according to Strategic Banking Corporation of Ireland (SBCI) Chief Executive Nick Ashmore.

Supply for these loans is strictly limited to €150m, so any potential borrowers who have not yet applied for these loans should do so quickly, he said.

The loans were launched by the SBCI last month and are available through AIB, Bank of Ireland and Ulster Bank.

We are experiencing strong demand and are well ahead of schedule. Therefore we would remind potential borrowers that it will not be possible to meet their requirements if they apply after the available supply has been used up.

The scheme was launched to allow farmers and agri-business SMEs (Small and Medium-sized Enterprises) to borrow up to €150,000 at a special low rate of 2.95% to address the difficult market conditions that they have faced recently.

Also Read: Everything you need to know about the low-cost loan scheme

The loan scheme, known as known as the Agri Cashflow Support Loan Scheme, was announced in the Government’s 2017 Budget and is being developed in conjunction with the Department of Agriculture, Food and the Marine.

‘Banks must show greater flexibility on low-cost loan scheme’

Meanwhile, IFA Farm Business Chairman Martin Stapleton said that banks must show greater flexibility on loan duration.

He believes that the banks must take into account the individual circumstances and repayment capacity of the farmer.

The roll-out of the low cost agri-cashflow loans has been a very positive initiative for farming at the start of 2017, he said.

“High demand clearly shows the requirement for competitively-priced working capital for farmers.

“However, IFA has identified a number of issues of concern to farmers in the approach of the banks.

Decisions are being made on loan duration and eligibility criteria that appear not to be within the spirit of the loans.

In particular, IFA is concerned that banks are offering only short-term financing of 12-24 months for working capital purposes, Stapleton said.

“This will be an entirely inappropriate timeframe of repayment for some farmers. It may make these farmers, who are most in need of the scheme, ineligible as a result.

“For these farmers, the debt that they are hoping to finance has built up over a number of years and cannot be repaid over a short period of time,” he added.

The flexibility that this loan should provide would allow these applicants to pay off their debts over a medium time frame, up to six years, with a lower annual repayment requirement, he said.

“Overall, it would put them into a more sustainable financial position.”