Save big by securing an EU investment bank loan
Impressive savings in interest on loans as banks obliged to offer rates at least 0.65pc lower
Published 02/11/2010 | 05:00
Ambitious targets for expansion of dairy, pig and poultry farms set out in the Food Harvest 2020 report have focused farmers' minds on farm investment.
In most cases, farm investment equals farm finance so the first step in farm expansion is likely to be a visit to the local bank.
One of the most important questions to ask the bank manager is whether your investment will qualify for the European Investment Bank (EIB) loan.
AIB, Bank of Ireland and Ulster Bank have received around €300m in discounted funding from the EIB to allow them to offer cheaper loans to expanding business.
The interest rate charged on an EIB loan is calculated by each bank individually but must be 65 basis points lower than the rate that would apply to the loan if the EIB were not providing a discount, according to the rules of the scheme.
A spokesperson for AIB, said its rate for EIB loans was calculated as the variable base lending rate plus 2pc.
For example, at a base lending rate of 0.921pc, a farmer could expect to pay a rate of 2.921pc on an EIB loan from AIB.
AIB has already used up its first tranche of €100m and has applied for a second tranche of €150m from the EIB, although this has not yet been approved. However, the bank is continuing to take applications for EIB loans, the spokesperson said.