Drought loan applications pour in, prompting federal government to supplement $ 2 billion program
Huge interest in a federally funded drought loan prompted Agriculture Minister David Littleproud to complete the $ 2 billion program and employ more people to help farmers complete the application form.
- Federal government to extend popular loan for drought-affected farmers
- The interest-free period will end on September 30, but the interest rate will drop to 1.92%
- The Regional Investment Company currently approves up to 400 applications per month
The additional funding will double the total financing of agricultural and small business loans from the Regional Investment Corporation (RIC) to $ 4 billion.
But loan applications received after September 30 will not be eligible for the two-year terms without repayment and interest, although borrowers approved after that date will pay a reduced interest rate of 1.92%.
Mr Littleproud said the RIC had fallen victim to its own success.
“At the beginning, we expected that … we would only have about 300 applications per year [for concessional drought loans] and we get about 600 [applications] a month, “he said.
There have been criticisms of the application process, with reports that some farmers had waited up to a year to find out if they had been approved for a drought loan.
But Mr Littleproud said additional operational funding of $ 50 million would be made available to the RIC for 2020-2021.
Rush of candidates
Drought-affected farmers now have just over two months to apply for an RIC loan before the interest-free period ends.
“We wanted to sufficiently inform the farmers that if they wanted to apply for the $ 2 million drought loans and not pay any interest or repayment, they had to file their applications,” he said.
“It has been a very generous program that the taxpayer has provided to the Australian farming community and it has been well deserved and much needed, but there comes a time when we as a country have to foot the bills.
“In fact, we’re saying that this interest-free, no-repayment period should end, but we’re going to give you a prime rate of 1.92% for its replacement after September 30,” Mr. Littleproud said.
Loans of up to $ 2 million were available for agricultural businesses and up to $ 500,000 for small businesses dependent on agriculture.