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With farmers potentially facing a cashflow crisis over the coming months, the main lenders to the agri-food sector maintain they have a range of products to suit various situations, including where a farmer might have no previous loan history.
“Lending decisions are based on repayment capacity.
“Where a farmer can demonstrate healthy farm accounts, we are able to support them,” said Ulster Bank’s Cormac McKervey.
Where credit facilities are required to fund farm inputs, an overdraft can be offered for a six- to 12-month period.
Overdrafts can be arranged without security, but at a slightly higher interest rate around 6%. Where security is in place, rates are more typically set at 4%.
For those farmers with existing overdraft facilities, this can be extended provided it is in the best interest of both parties.
But if an existing overdraft has a sizeable level of hardcore debt, increasing the credit limit is unlikely.
If the farm is facing a cashflow problem, talk to your bank early and explore the options available
Instead, banks are moving the cored debt on to a medium loan term with capital repayments, freeing up the existing overdraft to fund operating costs.
“If the farm is facing a cashflow problem, talk to your bank early and explore the options available.
“There is a sizeable number of farmers also facing a tax bill this year and this also needs to be factored in to cashflow plans,” added McKervey.
He pointed out that while inputs are rising, market prices for milk, cattle, sheep and grain prices are relatively strong, although further increases are required to cover production costs.
But the situation is very different on pig farms, with sustained losses and genuine hardship in the sector.
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