Blame spread for funding delays
Farmers have slammed the year-long delays in getting drought funding applications assessed.
The government’s recent drought stimulus package enables farmers to borrow up to $2 million and pay it back over a 10-year period. The first two years are interest free and require no repayments, with the following three years remaining interest-only.
The loan application process is managed by the Regional Investment Corporation (RIC), but farmers say the group often takes between six and 12 months to assess the documents.
“Farmers just want to know if they're eligible,” NSW Farmers Association Orange branch chair Bruce Reynolds has told the ABC.
“At the moment, farmers are in limbo as the process of getting these loans is very slow.
“It's taking up to a year after applying and they're still waiting for a result to see if their application is approved.
“The whole thing needs to be sped up because producers need to be able to access loans quickly in the middle of a drought, and if they are turned down they can look at other finance options.”
RIC chief executive Bruce King says the number of applications the group receives each week and risen severalfold.
“We've seen a significant increase in demand for these loans,” Mr King said.
“We have 45 staff involved in the process from start to finish, and have added more staff in recent months.
“We are putting forward a case that there is a need in RIC for more resources to better handle and improve the timeliness of our responses.”
The RIC chief says that since June 2019, loan application are assessed in an average of 187 days, with RIC assessors taking up 65 of those days and the rest being by bank assessments.
“We see the process as a partnership between the person applying for the loan, the bank, which is required to retain at least 50 per cent of the debt, and the RIC,” Mr King said.
“We have to negotiate the amount of security the banks and the RIC will hold, and there's a fair amount of time considering the application with the applicant.
“RIC only set up in Orange NSW 11 months ago, and it has taken a while to bed down and understand the processes that we are improving.
“For some early loan applicants, there have been experiences where it has taken a much longer time to get their loan approved.”
Federal Drought Minister David Littleproud also said banks are holding up the loan application process.
“The banks have been dragging their feet in providing the priorities for mortgages,” Mr Littleproud said.
“[The banks processes] have delayed the amount of time it takes for us to be able to get the money back out there to farmers.
“We are working as closely as we can with the banks and we will make sure that whatever resources are required by the Regional Investment Corporation will be provided.
“We are saying to the RIC, you have to respond quickly but the banks have to as well.”