From July 1st, thoroughbred breeders will have access to the loans offered by the Regional Investment Corporation. Gaining this access was something that Thoroughbred Breeders Australia (TBA) had lobbied governments for two years.
The loans are offered at a concessional rate – currently 2.31% – which is likely to remain lower than commercial lenders, as it is calculated on the back of the federal government’s bond rate, rather than that of the Reserve Bank of Australia.
While there are four types of loans available, the three most likely to be accessed by breeders are:
Farm Investment Loan: This is the most popular of the RIC’s loans and is typically used by farmers to refinance existing debt.
Agristarter Loan: Aimed at helping people obtaining their first farm business or buying relatives out of their farm businesses.
Drought Loan: To help farmers recover from drought or prepare for future climactic events.
All three of these loans have a 10 year loan term, with the first five years at interest only. The remaining debt at the end of the loan term can be refinanced with a commercial lender.
While these loans sound very attractive, there are some really important caveats to eligibility. For example, for the Farm Investment Loan a business has to demonstrate they have been adversely impacted by an event outside their control for two in the past five years; this may be drought, floods or disease outbreak.
For many breeders this will be relatively easy to prove given the recent drought, but people applying will need to be able to show this through their financial records.
Another criteria for eligibility is that applicants will be asked to demonstrate they intend to sell their products into supply chains that are mainly interstate or overseas. Again, given the national nature of horse racing, this is something that many breeders will be able to show; for example, NSW breeders selling stock at the Magic Millions interstate, or horses sold at auction being sent to interstate stables.
The feedback TBA has received from other farming groups is that the RIC approval process is slower and more bureaucratic than with a commercial lender, and that the eligibility criteria is strictly enforced. Anecdotally, other agricultural sectors have said the Farm Investment Loan is the most valuable and this is best used when refinancing.
For those considering whether RIC finance might be suitable for their business, TBA strongly encourages reading the loan guidelines (links below):
Farm Investment Loan
Farm investment loan guidelines: loans for farm businesses (ric.gov.au)
AgriStarter Loan – Regional Investment Corporation (ric.gov.au)
Drought loan guidelines: loans for farm businesses (ric.gov.au)
Those wanting to discuss the RIC Loans further should contact Craig Turner, who is a RIC business development manager and also has an understanding of the thoroughbred industry having been involved in ownership for many years.
However, TBA strongly encourages reading the loan guidelines before reaching out to Craig. He will then be able to provide further guidance on how an application could be progressed and how a farm could demonstrate its eligibility.
Craig can be reached at email@example.com or on 0466 515 307.