An obvious advantage of drought loan funding is access to concessional interest rates for ten years, but a drought loan could also enable you to implement a ‘once-in-a-lifetime’ intergenerational project.
Drought loan success in action
Seeking our help in completing a drought loan application has resulted in development of an innovative approach with long-term benefits for one of our clients.
When Mac* came to us his property had been drought affected for years. He was concerned that he would have nothing but dying land to pass on to the next generation. He had plans to improve water catchment and retention, but no way to fund the project.
We helped Mac to apply for a drought loan. As part of the application process, we considered the long-term benefits of drought infrastructure planning, not just from an ability to improve viability of the land, but from a succession planning point of view too.
For Mac, this longer-term planning approach and consideration of the next generation was vital. He had found that initial investigations into a standard bank loan did not take into account his ‘once-in-a-lifetime’ infrastructure goals, but was hindered by a more short-term view of only 10-15 years into the future.
The drought loan funding has been a game changer for Mac. The loan amount of $1 million included an allocation to purchase equipment for the installation of water runs in non-productive areas of the property to improve overall viability. He is now enjoying savings of $30,000-$50,000 per year usually spent watering stock.
An unexpected benefit from the drought loan application process was being able to fine tune his cashflow forecasting and production planning, and importantly, aligning his overall infrastructure goals in consideration of his succession planning needs.
Mac now has a farm that is set up to maximise retention of rainfall with long term benefits for his family, the community and future generations.
In my previous article about drought loans, I provide more information including details of our dedicated drought loan service and the potential benefits for your business.
100% success rate
We have considerable experience making loan applications. In fact, we currently have a 100% success rate for drought loan application approvals lodged with Regional Investment Corporation on behalf of our clients.
We understand that farming families have different skills and time availability when it comes to loan applications. To accommodate individual needs, we have created a loan application service that is based on ‘what you need’. Some clients require a few hours to review paperwork and discuss the overall process, while others may need a more comprehensive service that could include preparing a drought management plan, seasonal budget and scenario planning. Whatever your needs and experience, we’re here to help you with a fee package that’s fair and affordable.
Time is of the essence
Drought loans are for farm businesses affected by or recovering from drought. Applications must demonstrate significant financial impact over a two-year period, so with a predicted favourable season, you may need to act quickly to qualify.
There are other Regional Investment Corporation Loans that may be appropriate if you do not qualify for a drought loan. These include the AgriStarter Loan, a first farmer loan or a succession loan, and a Farm Investment Loan. We are available to discuss your options and/or assist with your loan application process.
At Financial Services SA, we have a personal interest in helping farming family businesses implement practical solutions that help them make the most of their situation. I have assisted primary producers and family business owners in rural and remote locations for more than 35 years.
If you would like to discuss drought support or if you need assistance with drought loan applications, I encourage you to contact me today on 08 8253 2906 or email email@example.com
* Name changed for privacy reasons.
Phillip Dibben is a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.
This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.