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Two weeks since the opening of the low-cost loan scheme, almost €20m or 15% of the €150m has already been approved by the main banks.
The three banks, Bank of Ireland, AIB and Ulster Bank, believe the surge in interest is pent-up demand as farmers had used cash over the previous two years on expansion.
They say the applications span all sectors and in particular dairy farmers who have expanded. The average loan application size is around €30,000. However, there are also a large number of farmers applying for the maximum €150,000.
The IFA has been inundated with queries over the past week from concerned farmers over eligibility. It seems that there is a lot of confusion over what is eligible and what term a loan can be for.
Even though the scheme is set to run until the end of September this year, two banks feel that if the current demand continues, the funds will be fully drawn within the next four months.
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The low interest rate of 2.95% for up to six years along with not needing to provide security is proving very attractive to farmers who are expected to swap out more expensive merchant credit along with replenishing cashflow previously used to fund past development.
Legally, banks are obliged to approve credit applications within 15 working days. Despite the large amount of applications, they are still promising this approval time.
IFA farm business chair Martin Stapleton said: “Farmers must make sure that their loan application is for an eligible loan purpose and to complete their applications accurately, to minimise the risk of the loan being turned down for a technical reason.”
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