Concerns have been raised that Murray Goulburn and Fonterra suppliers are not taking advantage of a Government loan scheme that could help them recover from the milk price cuts.
Fennell West Finance director Shane West said cash flow would be more important than ever over coming months and the recently announced discounted loan scheme could save farmers thousands of dollars in interest repayments.
“Now is the time for good planning and to ask questions, find out what is available and take advantage of what’s on the table. This loan scheme is available now and could benefit farmers for years to come, but it’s for a limited time and there’s a finite amount,” he said.
“Eligible farmers can apply to place 50 per cent of their existing debt, up to $1 million, in the loan scheme at an interest rate of 2.71 per cent over 10 years.’
“There’s a total pool of $30 million available in Victoria for suppliers who have been impacted by May’s price drop and who have good long-term prospects of returning to profitable trading and sustainable debt levels.”
Mr West said that with dairy farmers often holding significant amounts of debt, interest repayments could quickly become a major cash flow concern.
“For example, if you held $1,000,000 of eligible debt the interest cost at a rate of six per cent would be around $60,000,” he said.
“If 50 per cent of the debt could be financed through the loan scheme there’s potential to reduce the annual interest cost to $43,550 – a saving of $16,450.
“Although the season is looking promising and the factories are optimistic about price rises, that sort of saving could relieve a lot of stress and help family businesses survive.”
Mr West said the Australian Government’s Dairy Recovery Concessional Loan Scheme was being delivered by Rural Finance on behalf of the Victorian Government.
“In addition to restructuring eligible farm debt, the scheme can also be used to fund operating expenses that continue normal operations and for new loans that fund productivity enhancement activities,” he said.
Fennell West Finance Pty Ltd is a Corporate Credit Representative 480075 of BLSSA Pty Ltd ACN 117 651 760 Australian Credit License 391237.
