RADIO TRANSCRIPT: RIC CEO JOHN HOWARD SPEAKING TO ABC’S CASSIE HOUGH ON ABC SOUTH AUSTRALIA COUNTRY HOUR PROGRAM ABOUT THE NEW RIC DROUGHT HARDSHIP LOAN APPLICATIONS NOW OPEN.
SELINA GREEN: Well, the new drought hardship loans through the Regional Investment Corporation, well, they are now open. You might remember the Federal Government announced these new loans late last year and they committed a billion dollars to additional RIC loan funding to ensure farmers and producers could access it. Well, RIC's Chief Executive is John Howard, and he explains how it works and the eligibility.
JOHN HOWARD: So, the new Drought Hardship Loan is there to help those that have been in an extended period of drought. So, the eligibility requirement is that you need to have had at least two years of being financially impacted by drought, and that you can demonstrate that you'll be continuing into a third year. And for that is a new loan product up to $250,000. It'll be at our current interest rate of 5.18 per cent. This will be a five-year loan. But the key element for it is that there are no repayments required in the first two years of the loan. So, the interest will accrue during that time and then repayments will start at the beginning of the third year.
CASSANDRA HOUGH: That interest rate, though, is above what the State Government is offering in South Australia, though, as part of its drought support. Why did the RIC opt to not match the 50 per cent of the Commonwealth tenure bond rate the way the State Government has?
JOHN HOWARD: So, that's a decision that's made by the Federal Government when they design loan products. That methodology is provided to us at the RIC, and we go and implement that and the methodology for the interest rate is the same and is consistent with our existing loan product offering. The key part of our loan product is that it's available to anyone in any region that has been able to demonstrate a two-year impact and going into that third year. So, we're not defined by any areas or regions. We're available nationally to anyone that's experienced hardship for that period of time.
CASSANDRA HOUGH: So, who are you targeting with this new loan category?
JOHN HOWARD: So, the target is what's been recognised when the Minister announced this back in December was there were significant areas, and especially through Victoria and South Australia, that has had extended long periods of time being impacted by drought. And during those periods of time when there's an operating cost requirement that is ongoing, there is a need to have a new loan product that provides a more favourable cost, cash flow requirement to what our existing product does. And that's why the key element in this one is that two years of no payment. So, in that time interest will still accrue, it'll capitalise to your principal amount, and repayments will start at the beginning of the third year.
CASSANDRA HOUGH: And what can it be used for? What can the loan be used for?
JOHN HOWARD: The other big differentiator to our existing loan products that can be used to refinance existing debt is this product can't be used for that. But what it can be used for is operating costs that are being heavily incurred and required by people managing through extended drought. So, examples of that are wages and bills to buy fodder, carting water, transporting livestock or produce, those types of things that are high-cost elements through extended drought periods.
CASSANDRA HOUGH: And for people who are feeling the pain of fuel and fertiliser costs, and there's an unknown element to how long this will go on for at this point. How available will loans be for people who are particularly pressed in that area?
JOHN HOWARD: Yeah, so the key element within this is the eligibility criteria. So, the Drought Hardship Loan eligibility criteria, the new loan product, requires a demonstration of a two-year impact of drought and an ability to go into an extended period. Separately to that product we've got a Farm Investment Loan and within that is eligibility criteria which reflects a sudden or significant event outside of the control of a farm business or in other situations when a significant restriction comes about.
What we're seeing in fuel and fertiliser would align with that eligibility criteria within our Farm Investment Loan. The key component of that though is that they need to be able to demonstrate a two-year impact of that event. So, if someone's already had a drought, which a lot of your listeners would have, in combination with what we're seeing with fuel and fertiliser, then potentially our Farm Investment Loan could be an option for them in that space.
So, really encourage anyone that sees this as a potential option to seek out and talk to your advisors, rural financial counsellors, around whether this would be appropriate for you. But please go to our website. All the details are there regarding eligibility criteria, the documentation and everything that's needed for them to have in place before they do an application. Or there's always our contact centre to reach out to as well. But go to our RIC website ric.gov.au.
SELINA GREEN: That's John Howard there. He is the CEO of the Regional Investment Corporation speaking to Cassie Hough about those new drought hardship loans which are now available.
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