Farm Ireland
Independent.ie

Thursday 8 December 2016

Low-cost agri loans to be available within months - Minister

Published 01/11/2016 | 14:01

The Minister for Agriculture,Food and Marine Michael Creed, at Leinster House. Pic Tom Burke.
The Minister for Agriculture,Food and Marine Michael Creed, at Leinster House. Pic Tom Burke.

The Government’s new low-cost loan scheme for farmers will be available in early January 2017, the Minister for Agriculture Michael Creed has said.

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The Minister for Finance Michael Noonan announced on Budget day plans for a €150m agriculture cashflow support fund.

The fund will support highly flexible loans of up to six years in duration for amounts up to €150,000 at an interest rate of 2.95%. 

It will be available to livestock, tillage and horticulture farmers. The proposed interest rate will represent a significant saving to farmers when compared with other forms of finance currently available.

In the Dail recently the Minister for Agriculture said he is inviting all farmers to avail of this option if it is appropriate.

“Let it be clear that I am not encouraging farmers to borrow money,” he stressed.

“Whether the answer is to refinance existing loans will have to be looked at on a case-by-case basis. If there is a penalty for early payment of a loan, this may not be appropriate.

“If a farmer is making investments under TAMS next year, it might be appropriate If a farmer has merchant credit, it might be more appropriate.

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“Certainly, that may be so if a farmer has overdraft facilities at high interest rates. It is designed to be working capital,” the Minister said.

Details

Minister Creed said there will be a very simple credit application for an unsecured loan.  He said a farmer will not have to put ‘up the deeds to the farm’ to secure this loan.

“It is six-year finance at 2.95% and has an interest-only option for the first three years. It will be developed at the earliest possible date.

“My ambition is to have it in place in early January and the public call will go out from the SBCI shortly.

“The interest rate is 2.95% and there is nothing like it in the market,” he said.

It is understood that a tender will be issued to commercial banks, such as AIB and Bank of Ireland, to apply for the scheme.

The Minister recently said he has spoken to Bank of Ireland, AIB, and Ulster Bank.

However, he also highlighted that it is open to other financial institutions.

“I was recently asked whether the scheme is open to credit unions - I suspect it is, if they can demonstrate a capacity to deliver the product in a manner that is acceptable to the SPCI.

“We want these institutions to be involved because they have the required network and existing exposure to and understand of the agricultural lending sector,” Minister Creed said.

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