Interest rate cut for farm businesses in need
Farm businesses across Australia will be able to save thousands of dollars thanks to a cut in concessional interest rates from 1 February 2017.
The drop comes as part of the Coalition Government’s regular six-monthly review of concessional interest rates.
The interest rate for the Farm Finance Concessional Loans will drop from 3.55 per cent to 3.03 per cent, while the Drought Concessional Loans rate will fall from 3.05 per cent to 2.53 per cent, and Drought Recovery and Dairy Recovery Concessional Loans rate will decrease from 2.66 per cent to 2.07 per cent.
The interest rate for the Coalition Government's new Farm Business Concessional Loans Scheme, which began on 1 November 2016, will remain at 2.47 per cent.
Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said reduced concessional interest rates could save farmers with existing bank overdrafts and loans thousands of dollars.
“The Coalition Government has delivered on its commitment to back Australia’s farmers during tough times like drought and severe farmgate milk price cuts,” Minister Joyce said.
“For those farmers trying to recover from drought or the dairy cuts, this reduced interest rate means their decision to refinance using the government's scheme will deliver further savings of up to $5,900 over a year—a substantial saving and real benefit to people.
“Our farmers contribute about $58 billion to our nation's economy. Stronger farm businesses mean a stronger economy. Supporting viable farm businesses to better manage through drought and hardship is firmly in our national interest.
“So far more than half a billion dollars in concessional loans have been approved to more than 1,000 farm businesses nation-wide.
“The Coalition Government has also just launched the new $250 million Farm Business Concessional Loans scheme, which brings together the differing loans products, drought assistance concessional loans and dairy recovery concessional loans under a more flexible package.
“The government will be providing these loans at an initial variable concessional interest rate of 2.47 per cent for a maximum term of 10 years. Interest-only repayments are available for the first five years of the loan term, with principal and interest repayments for the next five years.
“Adjustments to the concessional interest rates are made in accordance with material changes to the Commonwealth bond rates.
“One farm business I know of in Queensland took out a $1 million Drought Concessional Loan and is saving around $33,300 in interest a year as they were paying around 6.35 per cent in interest with their commercial lender—that’s $33,300 a year going back into that business and $166,500 over the five-year loan term.
“Today's announcement means that from 1 February 2017, that business will save a further $5,200 over a full year.
“The government has responded decisively to the drought and dairy situation, and delivered responsive, effective and genuine assistance where it is needed on the ground.
“The government’s concessional loans schemes provide farmers with access to finance at lower interest rates to help them get through tough periods and give them a chance to rebuild their businesses.
“The government continues to deliver farm-strengthening initiatives from the $4 billion Agricultural Competitiveness White Paper, including making $2.5 billion in concessional loans available over the next 10 years.”
For more information regarding concessional loans, visit agriculture.gov.au/loans.