The Farm Finance Concessional Loans Scheme was available in Queensland, New South Wales, Victoria, South Australia, Western Australia, the Northern Territory and Tasmania in the financial years 2013–14 and 2014–15.
The scheme closed on 30 June 2015 in all jurisdictions.
What was a Farm Finance concessional loan?
Under the Farm Finance Concessional Loans Scheme an eligible farm business could receive a loan with a reduced interest or ‘concessional’ rate for a maximum period of five years.
Interest–only repayments are required during these five years.
The Farm Finance concessional interest rate is currently 3.55 per cent (effective 1 August 2015), applied nationally, and varies over time according to prevailing economic conditions.
At the end of the five year concessional interest rate period, the loan funds need to be repaid; for example, through successfully obtaining commercial refinancing.
The types of concessional loans available were for productivity enhancement and/or debt restructuring.
The types of loans offered varied between jurisdictions depending on what each jurisdiction’s government considered best met the needs of its farming sector.
What type of farm business received a Farm Finance concessional loan?
A farm business was approved for Farm Finance concessional loan if they:
- could demonstrate their need, their ability to repay a loan and could provide sufficient security
- were experiencing debt servicing difficulties but were considered commercially viable in the longer term.
Each loan applicant was required to meet eligibility criteria, borrowing obligations and provide evidence that they could meet loan repayments.
What were the eligibility requirements?
Each loan applicant was required to meet eligibility criteria, borrowing obligations and provide evidence that they were in a position to meet loan repayments specific to their jurisdiction.
What is the interest rate and life of the loan?
The concessional interest rate is currently 3.55 per cent (effective 1 February 2016).
This rate will continue to be reviewed on a six monthly–basis and may be adjusted to be in line with prevailing economic conditions.
The concessional rate of interest will apply to the first five years of the loan only, with commercial market lending rates applying to loans beyond the concessional interest rate period.
At the end of the five year concessional loan term, farm businesses have the option of fully repaying the loan or of refinancing the outstanding loan amount with a commercial lender.
The exact terms and conditions of concessional loans vary across jurisdictions.
Did a farm business take on additional debt with a Farm Finance Concessional loan?
Under the Farm Finance Concessional Loans Scheme, the Australian Government worked with the state and the Northern Territory governments to offer one or both types of concessional loans — loans for debt restructuring and loans for productivity enhancement activities.
Debt restructuring concessional loans do not add to a farm business’s overall debt. These loans provided debt relief for eligible farm businesses by refinancing some of their existing debt at a lower rate of interest.
Concessional loans for productivity enhancement activities do represent new debt for a farm business. These loans are aimed at enhancing a farm business’s productivity, thereby improving its debt servicing capacity.
How was the program funded?
The Australian Government announced $420 million in funding for the Farm Finance Concessional Loans Scheme for eligible farm businesses in each state and the Northern Territory.
Each jurisdiction had a capped amount each year (that is for 2013–14 and 2014–15) to deliver these loans. If the cap was reached, no more loans would be available in that jurisdiction.
What was the allocation of funding between jurisdictions?
The Minister for Agriculture, the Hon. Barnaby Joyce MP, announced on 6 November 2013 the reallocation of scheme funds following a review of the previous government’s allocations under the Farm Finance Concessional Loans Scheme. Under the previous allocation, funds for concessional loans had been allocated equally between each jurisdiction.
Under the reallocation, there was greater availability of loans in jurisdictions with a higher number of farm businesses and funding was better targeted to jurisdictions where farm businesses were facing worsening conditions. Under the reallocation, there was a $40 million reserve fund for 2014–15 to enable the Australian Government to respond to emerging issues.
New South Wales
|*The reserve fund went to Queensland and New South Wales —$20 million each|
Why does the government take security on the concessional loans?
The Australian Government takes a prudent approach to lending public money.
It is not reasonable to expect the Australian Government to deliver loans to farm businesses without any security being taken over the loans.
The delivery agencies in each jurisdiction worked with farm businesses and their existing lenders to ensure that, before approving a loan, satisfactory security could be provided.
What effect will these loans have on existing agreements with banks or other lenders?
When loans were offered in the jurisdictions, farm businesses were advised to carefully read the scheme guidelines and consider whether there are matters that should be discussed with their lender or financial advisor.
What is the difference between the Farm Finance Concessional Loans Scheme, the Drought Concessional Loans Scheme and the Drought Recovery Concessional Loans Scheme?
In 2014-15, there were three Australian Government concessional loan schemes. The table below summarises some of the key differences between each loan scheme. The Drought and Drought Recovery Concessional Loans will continue in 2015–16, however the Farm Finance Concessional Loan Scheme closed on 30 June 2015.
Farm Finance Concessional Loans Scheme (closed)
(was opened in all jurisdictions)
Queensland, New South Wales, Western Australia, Northern Territory, Victoria, South Australia, Tasmania
Debt restructuring (and productivity enhancement in WA, Vic, Tas)
50% of eligible debt to a maximum of between $650 000 and $1 million depending on the jurisdiction
Drought Concessional Loans Scheme (closed)*
(was opened in all jurisdictions except Tasmania)
Queensland, New South Wales, Western Australia, Northern Territory, Victoria, South Australia
Debt restructuring, operating expenses, drought recovery and preparedness
50% of eligible debt to a maximum of $1 million
Drought Recovery Concessional Loans Scheme (closed)*
(was opened in Queensland and New South Wales only)
Queensland, New South Wales
Planting and/or restocking activities
50% of eligible debt to a maximum of $1 million
* Re-opening in 2015–16. See Drought Concessional Loans Scheme and Drought Recovery Concessional Loans Scheme for details on which jurisdictions are participating.
If I have a Farm Finance Concessional Loan, am I able to transfer or extend my loan with a Drought Concessional Loan or a Drought Recovery Concessional Loan in the future?
If you are approved for, or have, a Farm Finance Concessional Loan, you may be able to transfer to a
Drought Concessional Loan in 2015-16 provided you meet eligibility criteria. Alternatively, you may be eligible for an additional loan under the Drought Concessional Loans Scheme or the Drought Recovery Concessional Loans Scheme.
A Farm Finance Concessional Loan cannot be refinanced as a
Drought Recovery Concessional Loan, but you may also be eligible for this product as a separate loan.
The combined maximum loan amount available under the Drought Recovery Concessional Loans Scheme, the Drought Concessional Loans Scheme will be up to 50 per cent of total eligible debt to a maximum of $2 million in total. Within this, the amount for the Drought Recovery Concessional Loan component cannot exceed $1 million. The limits for the Drought Concessional Loans Schemes will be outlined in their respective scheme guidelines.