Launch of bank loan scheme opens new flow of credit to farmers
A new government-backed bank loan scheme is set to open up the flow of credit to Northern Ireland's farmers.
Poultry producers will be the first to take advantage of the Agri-Food Loan Scheme, which opens for business on November 1 and is aimed at funding the construction of new farm buildings "necessary to increase supply of the primary produce for processing".
It will then be rolled out to other sectors of the farming industry including pig, egg, red meat and dairy production, once buy-in from processors in those industries is confirmed.
Commercial banks in Northern Ireland, including Bank of Ireland, Barclays Bank, Danske Bank, First Trust Bank, HSBC, Santander and Ulster Bank, will be taking part in the scheme and will deliver it to farmers in collaboration with Invest NI.
The banks will commit 60% to the loans while the Executive will put in 40% on a "subordinated basis", which means the latter will be repaid after the banks.
It's this form of guarantee which has helped entice the commercial lenders to extend their participation in an industry which has weathered the storm of recession much better than most and which is said to have huge potential in the years ahead.
The drive by the industry is a direct result of a report by an Executive-commissioned body the Agri-Food Strategy Board, which highlighted a difficult lending environment as curtailing growth in the sector.
It's understood the report is also helping change the basis on which lending decisions by banks to farmers is made, from one based on asset value, such as land, to one based on future cash flow.
Enterprise Minister Arlene Foster said the process of applying for funding will also be simplified. "Processes within the banks and Invest NI will be coordinated to ensure that applicants will only be required to submit one application for finance using the normal channels within the banks."
Finance Minister Simon Hamilton said funding schemes are vital.
"£10m has been allocated to Invest Northern Ireland to facilitate the first phase of the Scheme this year," he said.