Improved market prices across most farming sectors mean financial institutions expect few problems as farmers start to pay down borrowings taken out under the UK Government Bounce Back Loan Scheme (BBLS). Introduced last April, applicants could borrow between £2,000 and £50,000 at a fixed interest rate of 2.5%.
Loan terms extended to a six-year period with no interest charges or repayments made during the first 12 months of the term.
Farmers wishing to repay the loan earlier will also avoid financial penalties.
Intended as a support scheme for small businesses impacted by COVID-19, there was a significant uptake of the BBLS within the agricultural sector. According to Finance UK, the number of NI farmers applying under the BBLS totalled 2,953 during Q2 of 2020, which represents a threefold increase on loans taken out the previous year.
The value of loans during Q2 totalled £137m in 2020, up from £85m in the previous year.
During Q3 and Q4 of 2020, successful applicants totalled 1,369 and 747 respectively, approximately double the number of loans granted during the same periods in 2019.
While the value of loans during Q3 were up 49% year on year in 2020, by Q4 it was similar to 2019 levels at £50m.
While the number of loan applications surged during the spring and summer of last year, the level of cash on deposit for farm accounts has also increased year on year.
From Q2 to Q4 of 2020, cash on deposit grew from £482m to £589m.
Total agricultural borrowings in NI finished Q4 of last year at £1,076m, an 8% increase on Q4 of the previous year. However, total borrowings at the end of 2020 were down from £1,102m during Q3.