New laws clear way for launch of low-cost loan scheme for farmers
The Government pushed through legislation in the last sitting of the Dail in 2018 which now clears the way for the launch of a new low-cost loan scheme for farmers.
Minister for State at the Department of Agriculture, Andrew Doyle told Oireachtas Members the passage of the European Investment Fund Agreement Bill was 'urgent as it will give both Ministers the power to sign an agreement with the European Investment Fund by the end of the year for the purposes of launching the future growth loan scheme in early 2019'.
He described the scheme as a key Brexit mitigation measure.
To bring this loan scheme to the Irish market in early 2019, it was imperative that Ministers are granted the necessary powers to enter into the agreement with the European Investment Fund this year, which includes providing the necessary Exchequer funding.
Minsiter Doyle said the scheme is an important component of the Government's Brexit mitigation measures for businesses as it will provide businesses with the opportunity to borrow for periods between eight to ten years to support long-term capital investment.
"The tenure of borrowing currently available on the market for SMEs is typically anywhere from three to seven years.
"The future growth loan scheme has been developed to address a gap in the market for longer-term loans up to ten years," he said.
Given the particular exposure of the food sector to Brexit, the scheme, which will be 40pc funded by the Department for Agriculture, Food and the Marine and will be available to farmers.
To unlock the EIF counter-guarantee, which will be used to leverage funding of up to €300 million for the future growth loan scheme, the Department of Business, Enterprise and Innovation and the Department of Agriculture, Food and the Marine will collectively contribute €62 million in Exchequer funding over a five-year period.
This counter-guarantee with the EIF is a bespoke agreement, which is wider in scope than those available through the European Commission and offers 64pc risk cover rather than the standard 40pc.
It represents the first time that the Ministers have entered into such an agreement, although there is the potential for further such agreements in the future if needed.
This being the case the Attorney General has advised that primary legislation is needed to provide the necessary powers to both Ministers to enter into such an agreement.
Under the proposed Future Growth Loan Scheme loans of under €500,000 are to be made available on an unsecured basis. It is understood the minimum loan amount of €50,000 will be required for primary agriculture.
Minister for Agriculture, Michael Creed has indicated that the loans will be available as less than 5pc interest for terms of 8-10 years.
For Stories Like This and More
Download the Free Farming Independent App