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Saturday 21 April 2018

Agri entrepreneurs are turning to peer-to-peer lending and crowdfunding as an alternative to the banks

 

(stock photo)
(stock photo)
Johnny Lynch raised €50,000 in four minutes for his Macroom Buffalo Mozzarella company when he turned to an online, peer-to-peer lending site
Caroline Crawford

Caroline Crawford

Farmers who set up rural businesses to sustain their income are turning to crowdfunding sites to finance their ventures, with some businesses raising tens of thousands in a matter of minutes and hours.

Peer-to-peer lending and crowdfunding sites are taking off among farming and agri-food business start-ups in Ireland, a conference on farm diversification has heard.

Orla Casey from Momentum Consulting told the conference at GMIT that she was seeing more and more Irish rural start-ups turn to such sites. She said there was often a lack of awareness and a fear factor among farmers when it came to identifying where the funding opportunities were.

"It's not all about grants. Microfinance and crowdfunding are becoming so, so popular and so beneficial. I am seeing it more and more often and in the UK, 10pc of all business is using two formats, crowdfunding and pee-to-peer lending.

"In Ireland it is particularly popular with farming, agri food and tourism businesses. It is a little more expensive but the money is available much quicker," she said.

Ms Casey has over 20 years experience of accessing grants locally, nationally and internationally. She said the format also provides an opportunity to increase brand awareness.

"Not only are they securing finance but they are finding it really beneficial from a brand point of view. If you have a few hundred people invest in your business, they are going to want it to succeed. It's really not as complicated as you think and it's brilliant for building a profile and getting your business idea out there," she added.

One rural business which saw the benefits of peer-to-peer lending first-hand was Macroom Buffalo Mozzarella in Cork which raised a staggering €50,000 in just four minutes at an interest rate of 8.5pc.

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Adare Farm in Limerick raised €25,000 in just half an hour at 11.2pc while Dairyglen Ice Cream company in Wicklow has raised almost €100,000 through a peer-to-peer site at a rate of 7pc.

"The rates might be slightly higher than what is available in banks and credit unions, but they did not have to go through the other sticky finance routes and it is much quicker.

"The best rate in the credit union is about 6.5pc and the rate for peer-to-peer lending is about 8.5pc," added Ms Casey.

Another funding option which is proving popular with farm and rural businesses is the Cultivate project being offered through credit unions in the West. The project is specifically aimed at farmers.

David McDonnell of Naomh Breandan Credit Union in Loughrea told the conference the scheme had far exceeded expectations. Currently on offer among four credit unions in Galway, it will expand to five further credit unions in Clare and Limerick next month with expectations to expand into Cork later this year.

The project has funded 480 farmers up to the end of December, loaning out €5m.

"The average loan was around €12,000, often for machinery and equipment, but we've also had a lot of interest from dairy farmers who usually look for loans closer to €50,000," said Mr McDonnell.

"This is only the beginning for us. We had no idea we would be where we are just nine months in. We're delighted," he added.

The conference also heard from Christopher Scally of the Roscommon Leader Partnership about the ongoing scheme to train farmers on how to use the internet. The scheme has trained over 7,200 nationally so far with at least 5,000 more in for this year.

The scheme shows farmers how to move away from the blue book for herd register, showing them instead how to use the online system or how to print off statements for farm accountant.

Paperwork

"Every farmer with a herd number has that blue book. We're taking the farmer, minimising the paperwork, reducing the stress and moving them from the blue book to online. It streamlines the applications.

"We're looking at the AIM section so if they are moving cattle, especially for dairy farmers, for moving a calf, they can move that calf today but if they go back to the paper version, they are waiting a number of days, so we're making it more efficient," he added.

While a significant number of the farmers using the scheme are aged 65 to 75, it is also finding a lot of younger farmers from 18 to 35 wanting to upskill.

"That was our first year delivering the Getting Citizens Online programme and it has been incredibly successful.

"We want to get farmers up to speed, but we're finding from the age bracket of 36 to 45, a lot of farmers aren't engaging and we're trying to find out why," he added.


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