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Drought Concessional Loans Scheme

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​​​​​​​​​​​​​​​​​​​​​The Drought Concessional Loans Scheme is open for applications in New South Wales, Queensland, South Australia, Victoria, Tasmania, Western Australia and the Northern Territory.

The Australian Government is providing up to $150 million in 2015–16 for Drought Concessional Loans to assist drought-affected farm businesses manage through and recover from drought and return to viability in the long term. Loans of up to 50 per cent of eligible farm business debt to a maximum of $1 million will be available.

Drought Concessional Loans can be used for:

  • Debt restructuring: Applicants can use the concessional loan to restructure a proportion of their existing eligible debt at a lower interest rate.
  • Operating expenses: Applicants can use the concessional loan to fund operating expenses that are necessary to continue the normal operations of the farm business.
  • Drought recovery and preparedness activities: Applicants can use loan funds to contribute to the cost of activities to recover from and prepare for future drought.

Loans for operating expenses and drought recovery and preparedness activities would represent new debt for the applicant.

Delivery agency contacts

The Drought Concessional Loans Scheme will be delivered by different agencies in different states and territories, on behalf of the Australian Government.

More information, including scheme guidelines and application requirements, are available from the relevant delivery agency website for your jurisdiction.

​ Jurisdiction Status of 2015-16 Drought Concessional LoansWebsiteContact Phone
New South Wales Open for applications NSW RAA1800 678 593
QueenslandOpen for applications QRAA1800 623 946
South AustraliaOpen for applications PIRSA1800 182 235
VictoriaOpen for applications Rural Finance1800 260 425
TasmaniaOpen for applications State Growth1800 440 026
Northern TerritoryOpen for applications DPIF(08) 8936 4089
Western AustraliaOpen for applications DAFWA1800 198 231

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Drought Concessional Loans are designed to help a farm business recover from and prepare for future droughts and return to viability in the long term.

To be eligible for a Drought Concessional Loan, applicants must demonstrate:

  • their farm business has been financially impacted by drought, causing a financial need for assistance
  • the financial impact being experienced by their farm business is a result of the effects of drought, which is considered to be a rainfall deficiency equivalent to, or worse than, either a 1 in 10 year or a 1 in 20 year rainfall event as indicated in the Rainfall Deficiency Report produced by the Australian Rainfall Deficiency Analyser
  • they have taken reasonable steps to prepare for the effects of drought
  • their farm business has sound prospects for a return to commercial viability
  • they have an ability to repay the loan and provide adequate security, and their commercial lender agrees to the proposed arrangements for the concessional loan.

To help determine your rainfall event, applicants will need to use the Australian Rainfall Deficiency Analyser tool developed by the Bureau of Meteorology. Information on how to access and use the tool is available on the delivery agency website for your jurisdiction.

The Drought Concessional Loans Scheme is open for applications in:

  • New South Wales
  • Queensland
  • South Australia
  • Victoria
  • Tasmania
  • Northern Territory
  • Western Australia.

The Drought Concessional Loans Scheme’s variable interest rate as of 1 February 2016 is 3.05 per cent. The interest rate will be revised in accordance with changes to the Farm Finance Concessional Loans Scheme. The Drought Concessional Loan Scheme's interest rate will be maintained at 0.5 per cent below that rate.

A Drought Concessional Loan has a loan term of five years, with a concessional interest rate period of five years.

You only need to make interest payments during the five year loan term. Most farm businesses at the end of the loan term will need to refinance the remaining loan balance with a commercial lender. Some farm businesses may be in a position to repay the loan balance without refinancing.

Drought Concessional Loans for debt restructuring do not add to a farm business’s overall debt. These loans can provide debt relief for eligible farm businesses by refinancing some of their existing debt at a lower rate of interest.

Under the scheme, loan funds may also be used to meet operating expenses and for drought recovery and preparedness activities. This would provide a cash injection for farm businesses to meet their immediate financial needs and continue day-to-day operations. Loan funds for operating expenses and drought recovery and preparedness activities do represent new debt for a farm business.

You should carefully read the scheme guidelines and consider whether there are matters you should discuss with your current lender or financial advisor.

Taking up a loan under this scheme should not jeopardise your relationship with your lender.

Banks are familiar with the scheme and you should speak to your bank, financial advisor and relevant delivery agency to discuss what is best for your farm business’s circumstances.

It is important that farm businesses do not self-assess their eligibility for a Drought Concessional Loan. You should contact your delivery agency for assistance and details on the application process.

If you were approved for or have received a Farm Finance Concessional Loan, you may be eligible to transfer to a Drought Concessional Loan, provided you meet the eligibility criteria. Alternatively, you may be eligible for an additional Drought Concessional Loan or Drought Recovery Concessional Loan.

The combined maximum loan amount available under the Drought Concessional Loans Scheme, the Farm Finance Concessional Loans Scheme and the Drought Recovery Concessional Loans Scheme is up to 50 per cent of total eligible debt to a maximum of $2 million in total. Within this, the amount for the Drought Concessional Loan component cannot exceed $1 million. The limits for the Farm Finance and Drought Recovery Concessional Loans Schemes are outlined in their respective scheme guidelines.

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Last reviewed:
12 Apr 2016