Written by Ben Wilson
The drought currently affecting much of the country is one of the harshest on record. If you own an agricultural business, you already know the effect these conditions can have on your business and the broader community.
The Prime Minister recently proposed changes to the federal governments’ Drought Loan Scheme, with a plan to provide up to $2 million with no repayments for two years, to small agricultural businesses feeling the heat.
Drought Loan Scheme
The federal government introduced the Drought Loan Scheme in 2018, through its Regional Investment Corporation, to provide capital for agricultural businesses and communities and implement more sustainable practices for drought management.
Currently, the loan is offered to any agriculture, horticulture, pastoral, apiculture, or aquaculture business which has a registered drought management plan, under the following terms:
- The government will provide a loan matching the value of your businesses’ commercially held debt, capped at $2 million.
- The loan is provided for 10 years at a current variable interest rate of 3.11%.
- The first five years of the loan are interest only.
- The loan can be refinanced with a commercial lender after the interest-free period.
The current complete terms can be viewed here.
Proposed Changes to the Drought Scheme
This week, the Regional Investment Corporation announced it will be providing further support to agri-business owners by changing its terms to introduce a two-year interest-free, no repayment period to the loan.
They have also announced further loans of up to $500,000 to be offered to non-agricultural small businesses in communities heavily affected by the drought.
After speaking with the Regional Investment Corporation, we can confirm that the newly proposed loan terms will be retroactively applied to all current applications and loans.
These changes have passed cabinet meetings, and the Regional Investment Corporation has verbally advised they plan to offer loans under these terms in the coming weeks, once policies are finalised.
Who can the Drought Scheme help?
You and your business could be eligible for a Drought Loan from the Regional Investment Corporation if;
- You are in a drought assistance eligible area, shown here. You earn 50% or more of your income from your agricultural business, and under normal circumstances give 75% of your working effort to this business.
- Your business holds existing commercial debt.
- You have a Drought Management Plan, and a Cashflow Budget in place.
If you need more information, please contact us here.