Assistance for WA growers

Assistance for WA growers affected by drought and other challenging threats

635 loans valued at more than $715 million has been made to farmers.

BY DR IAN WILKINSON SENIOR RESEARCH SCIENTIST, DEPARTMENT OF PRIMARY INDUSTRIES AND REGIONAL DEVELOPMENT

Federal Government funding is available to assist farmers and small businesses assisting farmers during periods where their operations are adversely influenced by drought and other unforeseen issues, including hail and pest damage.

Three funding streams are administered by the Regional Investment Corporation (RIC) — Drought loans for farmers, Farm Investment loans for farmers, and AgBiz Drought loans for small businesses. In the financial year ending 30 June 2020, 635 loans valued at more than $715 million had been made to farmers.

Loans for farmers and horticulturists

Both farm loans are available to Western Australian farmers. Each allows for loans of up to $2 million, to be repaid over 10 years. The estimated processing time for the loan is six months or more from the time an application is completed. This is due to high demand — the RIC is working hard to improve those timeframes. Details of the criteria for the loans can be found at the weblinks provided at the end of this article. There are no eligible and non-eligible geographical areas defined for these loans.

3 DROUGHT and Farm Improvement loans can be utilised for the installation of netting to protect crops from the weather, and pest events. The loans can be applied for at any time, at no cost, however, applicants must have 50 per cent or more of their debt with a commercial lender.

Frequency of repayments will be tailored to the cash flow of each business, with no fees for extra repayments, or for early settlement of the loan. However, no redraws are permitted on the loan. With both loans, applicants must be Australian citizens or permanent residents, contribute at least 75 per cent of their labour to the business, earn at least 50 per cent of their income from the business, and own or lease land used for farming purposes.

The business must be in financial need TABLE 1. COMPARING THE DROUGHT AND FARM INVESTMENT LOANS. of a loan, have the capacity to repay the loan, have existing commercial Drought loan Farm Investment Loan debt, and be financially viable in the long term. Eligibility Demonstrated drought impacts on farm Solely/mainly sell, or plan to sell to interstate/international The business must be in the agriculture supply chains or horticulture industry, be registered Repayment First two years’ interest-free, First five years’ interest only, for tax purposes in Australia, with three years’ interest only, remaining five years’ principal an ABN and registered for GST, not remaining five years interest and interest be under external administration or and principal* bankruptcy, and operate as a sole Purpose Prepare for, manage, or Strengthen farm business, trader/trust/partnership or private recover from drought take steps to access markets company. Security must be provided for outside WA, prepare for, the loan, support from a commercial lender must be secured for the loan, manage through, or recover from drought and the loan must be repaid. Additional application Drought Plan required — see - Discussions held with the Australian documentation www.ric.gov.au/drought Government’s Regional Investment *For applications received before 30 September 2020. Applications received after this time will be five years’ interest only, followed by five years’ principal and interest. Corporation indicate that applicants must be able to demonstrate adverse impacts on their business for both loans. While there are no specific percentage loss figures required to trigger eligibility for loans, the details of any loss and reasons for reduction in turnover, or an increase in unsecured debt as a result of drought. Examples include businesses associated with apple packing and distribution. that loss will be considered in the Most of Western Australia is included loan application. in the eligible drought area, but areas The loan assessment team will relevant to the business should be confirmed on the map provided at contact applicants and seek the bottom of the AgBiz Drought further details if required, or if loans webpage. further supporting documents Loans of up to $500,000 are available, are needed to process and repayment terms and periods the application. are consistent with the Drought In the horticulture industry, these loans can be utilised for the installation of netting to protect crops from the weather (including sun, hail, storm), and pest events (bird damage to crops). Use of such netting will also assist in decreasing water usage for growing the crop (a drought mitigation measure). loans mentioned above. As with Drought loans, the first two years of the AgBiz Drought loan is interestfree when applications are received by Regional Investment Corporation before 30 September 2020. These funds will assist businesses with refinancing their debts, paying for operating expenses, suppliers, and/or salaries, wages and rent to assist with management during For further information on these loans call 1800 875 675. MORE INFORMATION • Regional Investment Corporation at 3 THE installation of netting can prevent fruit damage during storms. While similar, the two loans have some the drought. www.ric.gov.au/loans or call 1800 875 675 differences in eligibility, repayment criteria, the purpose of the loan, and documentation required to apply for the loan. These are shown in Table 1. Loans for small businesses Further information on loans For more details of any of the loans and the application process, view the Regional Investment Corporation website or call 1800 875 675. • • • Drought loans at www.ric.gov.au/drought Farm Improvement loans at www.ric.gov. au/farm-investment AgBiz Drought loans at www.ric.gov.au/ agbiz-drought supporting farmers It is recommended you regularly visit AgBiz Drought loans are for small the web page to check for any changes businesses (not farms) with less than that may have been made to the loan 20 staff (excluding casuals) that supply criteria, and note the 30 September goods and services relating to primary 2020 deadline for receipt of applications production to farm businesses in a for some of the loans in relation to Department of Primary Industries and drought-affected area that have had a interest-free repayment periods. Regional Development