Calls for reduction in minimum €50k loan under Government backed loan scheme rejected
The Minister for Agriculture Michael Creed has rejected calls for the minimum loan amount for farmers in the new Future Growth Loan Scheme to be reduced.
The scheme launched earlier this month and delivered by a number of participating banks will make up to €300 million of investment loans available to eligible Irish businesses, including farmers and the agrifood sector.
The scheme is designed to support long-term capital investment and it will be open to farmers from April 17th.
For loans up to €250,000, the maximum rate is 4.5pc. For larger loans, a rate of 3.5pc is available.
The minimum loan value is €50,000, with unsecured loans of up to €500,000 available. These loans are based on a repayment schedule of eight to ten years.
Chairperson of Irish Creamery Milk Suppliers Association's (ICMSA) Farm Business Committee, Shane O’Loughlin said "our first reaction is that the minimum amount of €50,0000 will actually be in excess of many requirements, we appreciate that there must be a cut-off at a particular point, but we would lower the amount to €20,000.
"We’d also be very disappointed at the decision to permit an interest rate of 4.5pc given that the previous scheme had money available at 2.95pc - a rate that is itself higher than would ordinarily be charged in similar circumstances in other European states," he said.
In response to a question on the scheme from Fianna Fail's Agriculture Spokesperson Charlie McConslogue Minister Creed said the new scheme is a long-awaited source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security.
"It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution.
"This type of long-term unsecured finance of 8 to 10 years is not currently available on the Irish market.
"Although the minimum loan amount for the Scheme is €100,000, I sought and agreed a minimum of €50,000 specifically for farmers.
"With a term of 8 to 10 years, I am advised that for smaller investment requirements, other types of finance may be more appropriate," he said.
The Minister also confirmed that three finance providers (AIB, Bank of Ireland and KBC) have agreed to participate in the Scheme and negotiations are ongoing with another two.