When drought puts pressure on your farm business, a low-interest loan from RIC (Regional Investment Corporation) may help.
RIC is a specialist low-interest farm business lender for the Australian Government.
A Drought Loan or Farm Investment Loan can help eligible farmers refinance debt, reduce interest costs and improve cash flow, providing breathing space to keep the business moving despite facing challenges outside their control.
Both loans offer up to $2 million over 10 years. Repayments are interest-only for the first five years, followed by principal and interest for the next five. A remaining balance may be due at the end of the term.
Another benefit of RIC loans it that the variable interest rate is only reviewed every 6 months with any changes effective on 1 February and 1 August each year, bringing greater certainty for farm businesses who are managing operating costs.
To be eligible for a Drought Loan, you’ll need to show a financial downturn over two consecutive years. This could be the previous two years, the past year and the year ahead, or two forecast years.
For a Farm Investment Loan, the impact can come from one or multiple events including drought, natural disaster, biosecurity issues or a market disruption. For example, you could have drought followed by a bushfire, a biosecurity incident or market disruption.
You don’t need a drought declaration to apply. However, you must have existing commercial debt, be able to make repayments and have adequate security.
“RIC low-interest loans provide a 'leg up', not a 'hand out', to keep viable farmers farming. When events outside a farmer’s control like low rainfall and drought put pressure on their business, having some financial breathing space can make a real difference,” RIC Chief Executive Officer John Howard said.
“We encourage farmers to consider RIC loans early as part of their business strategy to manage through the drought cycle.
"RIC loans help eligible farmers improve cash flow, reduce interest costs to manage through and recover from tough financial times, then plan and prepare for future drought conditions.
"We encourage farmers to learn more about our loans and talk with our Agri lending team about eligibility to understand if a RIC loan may be an option for their business.”
Since July 2018, RIC has approved 3,629 loans worth more than $3.82 billion. RIC estimates its loans saved Australian farmers and farm-related small businesses around $432 million in interest payments to 30 June 2026.
Visit www.ric.gov.au/quickquiz to learn more and discover if a RIC loan is right for you.