DEMAND for concessional loans through the Regional Investment Corporation has reached unprecedented levels, according to Minister for Agriculture, Drought and Emergency Management David Littleproud.
The Australian Government has today announced further assistance to farmers and small businesses via an additional $2 billion in loan funding to the Regional Investment Corporation (RIC) for 2020-21.
The additional funding, announced by Finance Minister Mathias Cormann, doubles the total farm and small business loan funds to $4 billion to meet demand for the RIC’s sought-after drought loan products.
“This funding is available this financial year to ensure support is provided where it is most needed and with the best possible impact,” Minister Cormann said.
“Parts of Australia have had good rainfall and the RIC’s drought loans can be used for recovery activities such as replanting and restocking”.
Minister for Agriculture, Drought and Emergency Management, David Littleproud said unprecedented demand for the concessional loans showed what a useful support mechanism it is for rural businesses at this time.
“These loans have been critical in helping farmers and small businesses facing hardship due to the drought.
The RIC will also be provided with additional operational funding of $50 million over four years to deliver the additional loan funding as well as process the significant volume of applications already on hand” Minister Littleproud said.
Minister Littleproud also announced that the additional loan funding comes with changes to loan terms, with the two-year interest free period not being available for the Drought Loan and AgBiz Drought Loan applications received after 30 September 2020.
“The Government announced the two-year interest free terms for these loans in November last year in response to the severe drought conditions that were being experienced in many parts of the country. With conditions improving it is now time to revert back to the previous concessional terms for the RIC’s loans,” Minister Littleproud said.
“I understand that parts of Australia are still experiencing drought and it will also take a number of years to recover. I encourage farmers and small businesses to get their application in before the end of September if they want to receive the benefit of the 2-year interest free period”.
“For applications received after 30 September 2020, a five-year interest only period will apply, followed by principal and interest for the remainder of the 10-year term.
“The interest rates for Farm and Small Business Loans will drop to 1.92% effective from 1 August 2020. These concessional terms will still enable rural businesses to save thousands of dollars a year on interest bills and put those savings to better use.
Minister Littleproud also announced that the RIC’s AgriStarter Loans, designed to support people in establishing a new farm business, buying an existing farm business or undertaking succession arrangements, will receive $75 million in 2020-21 and become available from 1 January 2021.
“The Government understands the importance of encouraging a new generation of farmers to the sector and the AgriStarter Loans will be a useful program to support this.”
Businesses can get more information about RIC loans by visiting the RIC website or calling 1800 875 675.
- Drought Loans assist farmers in preparing for, managing and recovering from drought. The loans can refinance existing debt, fund drought-related activities or productivity enhancements, or pay for operating expenses.
AgBiz Drought Loans assist small agriculture dependent businesses manage through drought. The loans can refinance existing debt or pay for operating expenses.
The two-year interest free terms for Drought Loans and AgBiz Drought Loans will not be available for applications received after 30 September 2020. The loan terms that will apply for applications received after this date are a five-year interest only period, followed by principal and interest for the remainder of the 10-year term.
The RIC’s new interest rates will apply from 1 August 2020. This change comes as a result of the RIC’s May 2020 Interest Rate Review.