Drought Concessional Loan Scheme Opens

Drought Concessional Loan Scheme Opens

25 June 2014

Eligible farmers in NSW who are experiencing financial hardship from drought are now able to apply for a concessional loan under the Drought Concessional Loans Scheme to help cope with the current conditions and recover when conditions improve.

Minister for Agriculture, Barnaby Joyce, and NSW Minister for Primary Industries, Katrina Hodgkinson, announced the roll out of the scheme in NSW late last week.

"I said we would deliver a loans package for farmers struggling with the drought in NSW – and we've delivered. I am pleased that $100 million in drought loans will now start flowing to NSW farmers," Minister Joyce said.

Minister Joyce and Minister Hodgkinson encouraged farmers not to self-assess, but to seek help to find out more about what is available.

The Drought Concessional Loans Scheme in NSW is being administered by the NSW Rural Assistance Authority. 

The availability of loans is subject to funds being available. The scheme will close on 30 June 2015. 

Key features of the Concessional Loans Scheme
  • Loans are available for eligible farm businesses for the purpose of restructuring existing eligible debt (including a Farm Finance Concessional Loan), providing new debt for operating expenses or drought recovery and preparedness activities, or a combination of these;
  • The loan is for a maximum term of five years;
  • Loan amounts will be up to 50 per cent of total eligible debt to a maximum of $1 million;
  • A variable concessional interest rate will apply which has been initially set at 4 per cent;
  • There is a concessional interest period of five years with interest only payments available for the loan term;
  • At the end of the loan term, the farm business must repay or refinance the remaining loan balance. 
Eligibility | Application Process

To be eligible for a Drought Concessional Loan you must demonstrate that you and your farm business meet the eligibility criteria.  As well as having existing eligible debt, your farm business must be experiencing a significant financial impact causing a financial need for a Drought Concessional Loan, and this must be as a result of the effects of drought.

Significant financial impact

A significant financial impact must occur over at least a two year period, and may include the forthcoming season where you can demonstrate that your farm business will continue to experience the same impact conditions. Evidence to support this may include financial measures including reduction in cash flow or profit, or production measures including destocking or reduced yield. 

Evidence provided in the financial statements, taxation returns and cash flow statements for your farm business, should be submitted with your application.

Drought Management Plan

In addition, to be eligible you must have taken reasonable steps to prepare your farm business for the effects of drought, including the provision of an acceptable drought management plan. A template for a Drought Management Plan is available on the NSW RAA website if required.

Eligibility is also dependent on meeting a number of further criteria in relation to the ownership, operation and structure of your farm business. Detailed information about the eligibility criteria for Drought Concessional Loans is available in the Drought Concessional Loans Scheme Guidelines.

Bureau of Meteorology Rainfall Deficiency Report

You will also have to provide with your application, a valid Bureau of Meteorology ‘Rainfall Deficiency Report’.  

These reports, which are valid for a period of 60 days from the date they are issued or accessed, identify those areas within Australia that have experienced one of the following two rainfall deficiencies, which extend 12 months or more. Note that the 12 month period must be continuous, in whole months (i.e. not part of a month) and wholly within the last two years.

The report will show whether your farm business is located in an area experiencing:

  1. A rainfall deficiency, which is equivalent to or worse than, a 1 in 20 year rainfall event (a rainfall deficiency at or below the 5th percentile), or  
  2. A rainfall deficiency, which is equivalent to or worse than, a 1 in 10 year rainfall event (a rainfall deficiency at or below the 10th percentile).

Where a valid ‘Rainfall Deficiency Report’ identifies that your farm business has experienced a rainfall deficiency as per point 1 above, the ‘Rainfall Deficiency Report’ will be considered evidence that the financial impacts being experienced by your business are as a result of the effects of drought.

For further information about the Rainfall Deficiency Report visit  the RAA website

The process for determining eligibility for a Drought Concessional Loan, completing the application form and providing the relevant evidence is complicated.  Please speak with your local Boyce Accountant or a Rural Financial Counsellor if you would like assistance with any aspect of this.

Scott Christian, Director | Boyce Dubbo

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