Farm Ireland

Sunday 18 March 2018

Farm loans of up to €100,000 may be offered by credit unions

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Stock picture
Dairy cattle shelter from the sun in a grove of trees on a farm near Barrie, Ontario, Canada. Photo: Chris Helgren/Reuters
Charlie Weston

Charlie Weston

A number of credit unions across the country are expected to soon launch dedicated loans for farmers.

It comes after the success of four west of Ireland credit unions are having with a new agri-loan product they jointly launched at the start of the year.

Credit unions in Munster, Ulster and Leinster are now interested in offering the same loan product, known as Cultivate.

The Galway lenders have already seen a large uptake of the farmer loans, with amounts available of up to €50,000, with terms of up to seven years.

There are plans to expand the loan product to allow lending of up to €100,000.

It has an interest rate of just 6.75pc, a cost that significantly undercuts the banks.

Cultivate is an initiative of four Galway credit unions that provides short to medium-term loans designed specifically around the growing needs of farmers.

Ballinasloe, St Jarlath's, Naomh Breandáin and Gort credit unions started the initiative to appeal to the financial needs of the more than 13,000 farming households in Co Galway.

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The four lenders consulted with the Irish Farmers' Association, Teagasc and Mountbellew Agri College.

Staff at the credit unions spent eight weeks doing one-day courses at Mountbellew to familiarise them with farming, according to Niall Clarke, marketing manager of Ballinasloe.

Working capital

Research carried out by the lenders revealed that the provision of working capital for famers is a key issue.

The loans are used to develop the likes of slatted sheds for wintering cattle, investing in new machinery or to help with cash-flow until the likes of single farm payments are made.

"We are getting a lot of interest from other credit unions in taking up the Cultivate agri-loan product," Mr Clarke said.

He said the loan product was only launched in March by the four lenders but already €3.75m in loans have been given out. Average loan sizes are between €15,000 and €20,000.

"It has really taken off. We are getting great feedback from the farming community," Mr Clarke said.

Many of those taking out the loans work part-time and use their wages to service the loans.

The credit unions have developed their own software to assess applications.

Credit unions already lend to farmers, but this Cultivate loan is the first of its type to be specifically designed and marketed to the agricultural community.

A spokesman for the Irish League of Credit Unions said farming is an integral part of communities the length and breadth of the country and the borrowing needs of farmers can be quite diverse.

"Credit unions are uniquely positioned within local communities to understand the distinct requirements of farmers and to help support their short and medium-term financial needs."

He added that agri-loans are a growing area for many credit unions, which are always looking at ways to undertake new lending.

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