Skip links and keyboard navigation

FAQs - Business Improvement Concessional Loans

Q&A – Business Improvement Concessional Loans

Who is eligible to receive a Business Improvement Concessional Loan?

If you have exhausted your 3-year allocation of Farm Household Allowance you may be eligible for a Business Improvement Concessional Loan.

What documentation do I need to provide to show that I have exhausted my Farm Household Allowance?

This may include:

  • a copy of the letter from the Department of Human Services (DHS) advising that the farmer’s FHA payments have ceased as a result of completing 1,095 days of the payments.
  • other supporting documentation deemed suitable by QRIDA

What purposes can a Business Improvement Concessional Loan be used for?

Business Improvement Concessional Loans can be used for debt restructuring purposes only. This can apply to existing Commonwealth Concessional Loans, or existing commercial debt.

Will I have to meet principal payments during the term of the Business Improvement Concessional Loan?

Yes. Interest only repayments are required for the first five years.

Principal and interest repayments are required from years six to 10. In this period loan repayments will be calculated on the basis of a 10 year loan term, meaning that generally only a proportion of the principal will be repaid during the loan term.

Do I need to have the support of my commercial lender?

Yes. The guidelines require your commercial lender to support the proposed arrangements for a Business Improvement Concessional Loan.

Can an overdraft balance be included in the calculation of eligible debt?

No. The funding of normal or additional working capital is an example of non-eligible debt.

Exceptions will be considered where there is clear evidence (for a period of more than one year) of a significant hardcore component within the overdraft facility.

How will my farm business be assessed on its capacity to repay the Business Improvement Concessional Loan and maintain prospects of commercial viability?

To assess the capacity of your farm business to repay the Business Improvement Concessional Loan, QRIDA will:

  • perform a viability assessment, based on your past three years’ trading performance
  • assess your current financial position
  • assess your cash-flow estimates, to determine that the farm business can service its commitments including the Business Improvement Concessional Loan.

An assessment of longer term prospects of the farm business, based on the content of your application, will also be undertaken.

Can I apply to refinance an existing Commonwealth Concessional Loan into a Business Improvement Concessional Loan?

Yes. However, you must pay any interest accrued on the existing Commonwealth Concessional Loan to the date of refinance.

You will also need to satisfy the eligibility and loan assessment criteria for a Business Improvement Concessional Loan.

Will I have to pay loan establishment or other costs a second time if I refinance my existing Commonwealth Concessional Loan to a Business Improvement Concessional Loan?

If you are refinancing your existing Commonwealth concessional loan using the same loan security, QRIDA may not need to undertake the same registration processes – keeping any additional costs to a minimum.

Can an ABN which is held in different names from the names of the applicants be used to support the application?

No. Applicants must have their own ABN and be registered for GST.

If I bought my farm business less than three years ago, would I be eligible for a Business Improvement Concessional Loan?

No. The scheme guidelines require applicants to have owned and operated their farm business for at least the past three consecutive years.

However, if the farm business was carried on by say, a partnership for part of the required three year trading period and, on accountant’s advice, the operating entity was changed to a company or family trust, the new entity may be eligible for a Business Improvement Concessional Loan.

This is provided the same parties/principals have been involved in the business for at least three years and all other scheme criteria are met.

What types of debts can I restructure with a Business Improvement Concessional Loan?

Eligible debts for restructuring with a Business Improvement Concessional Loan include:

  • part or all of your existing Commonwealth Concessional Loans, which include:
    • Farm Finance Concessional Loans
    • Drought Concessional loans
    • Drought Recovery Concessional Loans
  • your existing commercial farm debt facilities that have been established upon commercial interest rates, terms and conditions.

What is non-eligible debt and why do I need to provide these details with my Business Improvement Concessional Loan application?

Non-eligible debt includes all farm-related debt facilities that are not considered to be eligible debt under the scheme. Examples of non-eligible debt may include:

  • equipment finance loan facilities
  • existing QRIDA PIPES or QRIDA NDRRA loan facilities
  • overdraft facilities
  • family or private debt facilities.

The scheme guidelines require that your farm business’s final debt position, after the proposed funding of a Business Improvement Concessional Loan, must comprise no more than 50 per cent of Commonwealth loan facilities.

In order for QRIDA to determine your eligibility for a concessional loan, we require details of both your eligible and non-eligible debts.

If I am approved a Business Improvement Concessional Loan to restructure all or part of my existing fixed rate facility, will any break costs charged by my commercial lender for early repayment be covered?

No. Break costs are a matter between your commercial lender and yourself, and any such costs will be your responsibility. You will need to weigh up the financial benefits of the Business Improvement Concessional Loan against the likely financial cost of breaking a fixed rate contract.

If you have a fixed rate facility due to mature shortly, it may be possible to delay the drawdown of the Business Improvement Concessional Loan to coincide with the expiry of the fixed rate contract.

However, Business Improvement Concessional Loans should be drawn down within six months of approval.

Last updated
6 July 2017