Bank of Ireland staff gave a presentation on the new loan scheme for farmers which was launched by the Department of Agriculture, Food on the Marine on February 2 last.
The Agriculture Cashflow Support Loan Scheme was developed in co-operation with the Strategic Banking Corporation of Ireland (SBCI), and has made €150m available to farmers nationwide at low-cost interest rates of 2.95%.
The Scheme will provide farmers with a low cost, flexible source of working capital and will allow them to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.
It forms part of a ‘three pillar strategy’ in response to income volatility and along with tax measures and farm payments, it will alleviate some of the pressures being caused by the recent market difficulties, which have been compounded by the uncertainty around Brexit.
Tracey Stewart and Ita Grey, branch manager in Longford spoke during the AGM about the benefits to the loan scheme and advised farmers on how to apply for it.
“The loan brought out to help farmers and free up working capital,” said Ms Stewart before pointing out that it included a maximum application of €150,000 with a minimum term of one year, maximum term six years with interest only repayment option and 2.95% interest rate.
“The loan is for creditors, merchant finance and overdrafts.
“These have been the main reasons and it is there to free up working capital so that short term debt can be removed on a structure basis at a low rate.”
The Bank of Ireland official went on to say that many farmers were accessing the loan for works like fencing, purchasing stock and purchasing machinery.
“You can’t be in financial difficulty nor can you be convicted of an offence when applying for this local and eligibility includes GLAS; REPS, Partnership or the undertaking of a training programme with Teagasc; most people would qualify under one of those areas,” she continued.
“Capital infrastructure includes any work carried out on the farm including purchase of machinery, drainage, land reclamation, veterinary bills, revenue etc.
“A farmer I know was converting from beef to dairy and spent the guts of €200,000 on his farm.
“He came to me in January and said he was putting in a robot; he needed to borrow €150,000 and under this loan scheme, we were able to prove that he had already spent €200,000 and were then in a position to give him the €150,000 to buy his robot and get the infrastructure in place.
“He got that €150,000 at the 2.95% over six years with no security with a six month interest only option to get him up and running.”
She also said that this was probably one of the most successful loan applications she had secured.
“The most popular option at the moment is borrowing around €50,000 over five years; that works out at around €897 per month,” added Ms Stewart.
Bank of Ireland was allocated €65m under the scheme but Ms Steward told last week’s IFA AGM in Longford that there was very little of that money left now.
“If you haven’t applied for it, you need to get onto your bank,” she warned farmers.
“At the moment Bank of Ireland is taking loan applications on a provisional basis.
“There are a number of areas we look at when approving the loans - the first is track record; the second is a 30% own input; and another one is security, although this does not apply under this particular loan scheme.
“Security is the one area that got so many people into trouble in the boom times and this is certainly an area that Bank of Ireland would be keeping a very close eye on these days.”