Special Loans Granted for First Farm Buyers

Article by: Hari Yellina

In the face of rising land costs, National Australia Bank has created a new loan to assist farmers in purchasing their first properties. The NAB’s Future Farmer loan, designed to help farmers fund their first farm or manage succession, has lower equity requirements and periods of up to 30 years. NAB Regional and Agribusiness Executive, Julie Rynski, said that the loan had been in the works for around eight months after the bank decided to help people go into farming.

“I was reading an article about a Queensland manager who was looking to buy a property he’d been working on for a number of years because the farmer wanted to sell and he didn’t have the equity,” she explained.” Ms Rynski added that standard interest rates would apply to the Future Farmers loans to “be fair” to the bank’s existing clients, but that principle repayments would be easier to handle because the durations could be as long as 30 years.

While Ms Rynski couldn’t say how much equity was required to acquire one of the loans, she did say that candidates would need to be able to demonstrate solid agricultural expertise and that off-farm income produced by themselves or family would be taken into account. “It’s not necessarily young people,” she explained, “but folks who have been doing this type of labour for a while and then have the opportunity to purchase their own piece of property.” “It’s just a way for us to say that if they have the experience and we know they’ll be able to make this sustainable and successful for their own goals, we’ll be pleased to help them in a different way.”

The Future Farmers loan would be just as suitable for farmers needing to buy out siblings as part of a family succession process, Ms Rynski said. The loans would still need to comply with regulatory requirements regarding affordability but represented movement within the bank’s own parameters although, Ms Rynski said, NAB recognised that low-equity loans were not ideal for most businesses. “The reality is that there is some risk associated with it,” she said.

Those with a Future Farmers loan would be paired with one of the bank’s agriculture specialists to help manage their finances and be offered a subscription to accounting package, Xero, for better oversight of their position. “I think we are Australia’s largest agri bank, we’re passionate about it and we know that, for agriculture to be successful, we need to support the next generation,” Ms Rynski said. “The total number of farmers are decreasing year on year and you know, we just want to support whoever we can.”