Credit unions may be involved in €150m farmer loan fund
“I was recently asked whether the scheme is open to credit unions,” said Agriculture Minister Michael Creed last week.
“I suspect it is, if they can demonstrate a capacity to deliver the product in a manner that is acceptable to the SBCI [Strategic Banking Corporation of Ireland],”
“We got €11 million from Europe for the livestock sector. We thought it was strategically far more important to put €14 million of exchequer funding alongside that €11 million, and thereby leverage a loan fund of €150 million, rather than spread the €11 million across 100,000 family farms,” said the Minister.
He said the SBCI and the EU’s COSME programme for the Competitiveness of Small and Medium-sized Enterprises are not providing funding, but are providing 50% of the guarantee required to underpin the flexibility, and bring down the cost of the loans within the €150 million fund.
“The SBCI will put out a call for partners to deliver the scheme.
“I have spoken to Bank of Ireland, AIB, and Ulster Bank. It is open to others. We want these institutions to be involved because they have the required network and existing exposure to and understand of the agricultural lending sector. Let us get the scheme up and running as quickly as possible.”
He said livestock, tillage and horticulture farmers farmers will have access to this fund, with particular relevance for tillage farmers in the context of TAMS, which will be available early in the new year.
A specific fund to bail out the Irish tillage sector is not permitted under EU state aid rules.
“What we are availing of de minimis is to extend the loan facility to the tillage sector.”
He said, “Let it be clear that I am not encouraging farmers to borrow money. I am inviting them to avail of this option if it is appropriate.
“Whether the answer is to re-finance existing loans will have to be looked at on a case-by-case basis. If there is a penalty for early payment of a loan, this may not be appropriate.
"If a farmer is making investments under TAMS next year, it might be appropriate. If a farmer has merchant credit, it might be more appropriate.
“Certainly, that may be so if a farmer has overdraft facilities at high interest rates.
“It is designed to be working capital.”
“There will be a very simple credit application for an unsecured loan.
“A farmer will not have to put up the deeds to the farm to secure this loan.
“It is six-year finance at 2.95% and has an interest-only option for the first three years.
“ It will be developed at the earliest possible date. My ambition is to have it in place in early January and the public call will go out from the SBCI shortly. The interest rate is 2.95% and there is nothing like it in the market.
