Drought Concessional Loans
The Drought Concessional Loans Scheme is part of an Australian Government drought assistance package aimed at assisting Farm Businesses that are experiencing a Significant Financial Impact as a result of the effects of drought.
Drought Concessional Loans are designed to help Farm Businesses recover from and prepare for future droughts and return to commercial viability in the long term.
The Australian Government is making available Drought Concessional Loans to eligible Farm Businesses, which can be used for the purposes of restructuring existing Eligible Debt (including a Farm Finance Concessional Loan provided under the Farm Finance Concessional Loans Scheme), providing new debt for Operating Expenses or Drought Recovery and Preparedness Activities, or a combination of these.
Under the scheme, the Australian Government has provided New South Wales with $100 million over 2013–14 and 2014–15 and $30 million over 2015–16 for the provision of Drought Concessional Loans. Funding for 2015-16 may be increased, subject to demand and at the discretion of the Australian Government.
Applications for the Drought Concessional Loans Scheme will close when funding is fully committed or on 31 October 2016 (whichever occurs first).
- loans are 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
- a maximum loan 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, currently 3.05 per cent (from 1 August 2015)
- a concessional interest period of five years
- interest on payments available for the loan term
- at the end of the loan term, the farm business must repay or refinance the remaining loan balance.
To be eligible for a Drought Concessional Loan you must:
- demonstrate that you and your farm business meet the drought concessional loan eligibility criteria. Detailed information about the eligibility criteria for drought concessional loans is available in the Drought Concessional Loans Scheme Guidelines
- complete and submit an application with all the necessary supporting documentation including:
- the required evidence to demonstrate that your farm business is experiencing a significant financial impact, causing a financial need for assistance; and
- the required evidence to demonstrate that the significant financial impact is a result of the effects of drought; and
- the required evidence to demonstrate that you have taken reasonable steps to prepare your farm business for the effects of drought, including through an acceptable drought management plan; and
- a valid Bureau of Meteorology Rainfall Deficiency Report; and
- confirmation from your current commercial lender(s) of support if a drought concessional loan is approved.
- provide satisfactory security for loan.
Bureau of Meteorology Rainfall Deficiency Report
Applicants must submit a valid Bureau of Meteorology Rainfall Deficiency Report as part of their application. Applications without a valid report will not be processed.
The report identifies those areas that have experienced the following two rainfall deficiencies for 12 months or more whole continuous months within the last two years:
- 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)
(If your report indicates that you are located in this area, your report will be considered evidence that the financial impacts being experienced by your farm business are a result of the effects of drought)
- 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)
(If your report indicates that you are located in this area, then you must provide evidence of significantly reduced income and/or significantly increased expenditure that is directly related to drought conditions in addition to your report [see the Scheme Guidelines for more information])
If your farm business is not located in either of the above rainfall deficient areas, you are not currently eligible for assistance under the Drought Concessional Loans Scheme.
To obtain a Rainfall Deficiency Report, locate your farm business on the map and download a report using the Bureau of Meteorology - Australian Rainfall Deficiency Analyser. To locate your farm business on the map, you can enter latitude and longitude coordinates of your farm business or you can zoom and click on the location of your property on the map. Once you have located your farm business, an option to download a Rainfall Deficiency Report becomes available. You can use a hard copy map, smartphone application or internet search to find the latitudes and longitudes of your farm business.
Your Rainfall Deficiency Report will be valid for a period of 60 days and forms part of your loan application. If you are unable to lodge your application within the 60 day period you will need to request a new report.
It is important to note that the Bureau of Meteorology updates the rainfall deficiency data used for the summary maps and reports on the 23rd of each month (or next business day). These updates may affect which areas have experienced eligible rainfall deficiencies within the previous 24 months. This may in turn affect the eligibility of your farm business for a drought concessional loan.
When assessing applicants, NSW RAA will verify the information provided by applicants in their applications.
This program is funded by the Australian Government and delivered by the NSW Rural Assistance Authority.