The most eye-catching budget proposal for the agriculture sector is the €150m fund created to offer low interest cashflow loans to farmers.
The Department say this fund is a recognition of the cashflow and income challenges facing farmers right now. It will allow farmers to apply for loans to a maximum value of €150,000 at a discounted lending rate of 2.95%.
This is a much more competitive lending rate than anything in the market. The average lending rate in Ireland is about 5.7%, according to the Central Bank. There is also an option within this lending facility for interest-only repayments for the first number of years.
Farmers from all sectors including livestock, tillage and horticulture will be able to apply for funding and no security will be required. There is also no minimum on the amount of money a farmer can apply to borrow.
Announcing the new funding, Minister for Agriculture Michael Creed said there is flexibility built into this product and it is a response to addressing the exceptional income situation facing many farmers.
The minister urged farmers to take a look at their businesses and take a considered view of their cashflow and borrowings to see if this cashflow loan is for them.
Minister Creed said he hoped the fund would be open to farmers by January 2017 at the latest.
While the Department will now engage with the lending institutions to try and roll out the lending facility as soon as possible, the closing date for the fund availability is set in stone.
All loans from the €150m fund will need to be drawn down by September 2017 in order to comply with EU reporting requirements.
Mechanics of the fund
The Department of Agriculture only finalised the details of the loan fund in the days leading up to the budget. In July, the European Commission announced a €350m aid package for European farmers, with €11m awarded to Ireland.
The Government added €14m to this €11m in EU funding and used the combined €25m as leverage to draw down the €150m in funding from the Strategic Banking Corporation of Ireland (SBCI). The €25m leveraged for the fund is to guarantee against first losses should they arise as well as subsidising the interest rate by about 3% in order to bring it down to 2.95%.
IFA president Joe Healy welcomed the introduction of a new €150m cashflow support loan fund for the agriculture sector, which will be available to farmers in all sectors. “The minster has been very accessible and he has listened to us right throughout the year. One of the main things we pushed for since last April was low-cost credit for farmers. Thankfully there has been an announcement on that in the budget and loans will be made available to farmers of under 3%,” added Healy.
1. By January 2017 at the latest, farmers will be able to apply for loans to a maximum of €150,000 at a lending rate of 2.95%.2. Farmers will be able to apply for a cashflow loan from the €150m fund through the main banks.3. No security or asset guarantee will be required to draw down funding.4. All funding must be drawn down by September 2017. Read more
Full coverage: Budget 2017
The most eye-catching budget proposal for the agriculture sector is the €150m fund created to offer low interest cashflow loans to farmers.
The Department say this fund is a recognition of the cashflow and income challenges facing farmers right now. It will allow farmers to apply for loans to a maximum value of €150,000 at a discounted lending rate of 2.95%.
This is a much more competitive lending rate than anything in the market. The average lending rate in Ireland is about 5.7%, according to the Central Bank. There is also an option within this lending facility for interest-only repayments for the first number of years.
Farmers from all sectors including livestock, tillage and horticulture will be able to apply for funding and no security will be required. There is also no minimum on the amount of money a farmer can apply to borrow.
Announcing the new funding, Minister for Agriculture Michael Creed said there is flexibility built into this product and it is a response to addressing the exceptional income situation facing many farmers.
The minister urged farmers to take a look at their businesses and take a considered view of their cashflow and borrowings to see if this cashflow loan is for them.
Minister Creed said he hoped the fund would be open to farmers by January 2017 at the latest.
While the Department will now engage with the lending institutions to try and roll out the lending facility as soon as possible, the closing date for the fund availability is set in stone.
All loans from the €150m fund will need to be drawn down by September 2017 in order to comply with EU reporting requirements.
Mechanics of the fund
The Department of Agriculture only finalised the details of the loan fund in the days leading up to the budget. In July, the European Commission announced a €350m aid package for European farmers, with €11m awarded to Ireland.
The Government added €14m to this €11m in EU funding and used the combined €25m as leverage to draw down the €150m in funding from the Strategic Banking Corporation of Ireland (SBCI). The €25m leveraged for the fund is to guarantee against first losses should they arise as well as subsidising the interest rate by about 3% in order to bring it down to 2.95%.
IFA president Joe Healy welcomed the introduction of a new €150m cashflow support loan fund for the agriculture sector, which will be available to farmers in all sectors. “The minster has been very accessible and he has listened to us right throughout the year. One of the main things we pushed for since last April was low-cost credit for farmers. Thankfully there has been an announcement on that in the budget and loans will be made available to farmers of under 3%,” added Healy.
1. By January 2017 at the latest, farmers will be able to apply for loans to a maximum of €150,000 at a lending rate of 2.95%.2. Farmers will be able to apply for a cashflow loan from the €150m fund through the main banks.3. No security or asset guarantee will be required to draw down funding.4. All funding must be drawn down by September 2017. Read more
Full coverage: Budget 2017
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