Banks warn of 2pc hike in interest rate
Farmers planning investments to gear up for the targets of Food Harvest 2020 have been warned to prepare for a tougher lending regime from the banks.
Collateral of up to 150pc will be required from farmers as security for loans. They will also be required to provide verified farm accounts for at least three years to establish their trading record before approval will be considered.
On the cost of the money, the message is that interest charges on borrowings will be set at a rate to reflect the cost of money to the banks, with guidelines to project for a 2pc increase in interest charges over the duration of a five-year loan.
However, AIB who are hosting a series of seminars on banking have assured farmers of support in providing capital for on-farm investment, albeit on more rigid terms than before.
Southwest director, Patrick Fitzharris, said that AIB remains appreciative of farm business and that agri-business will once again be a primary focus of the bank.
Farmers were also told that good land used as security against loans is now being valued by the bank at €8,000/ac.
Meanwhile, ICMSA president Jackie Cahill has launched a scathing attack on the rising fees and charges being imposed on farmers by the country's remaining banks.
"There is a widespread view that the banks are using every opportunity at restructuring to hike up interest rates charged to the customer," he warned.