DROUGHT CONCESSIONAL LOANS SCHEME
These guidelines relate solely to the Drought Concessional Loans Scheme in South Australia.
SCHEME GUIDELINES FOR SOUTH AUSTRALIA
JULY 2015
FOR FURTHER INFORMATION:
Telephone
1800 182 235
Fax
08 8226 0229
Email
PIRSA.RuralFinance@sa.gov.au
Post
PIRSA - Prudential & Rural Financial Services
GPO Box 1671
ADELAIDE SA 5001
Website
pir.sa.gov.au
Table of contents
Drought Concessional Loans Scheme at a glance......................................................................... 3
1.
1.1
Overview ................................................................................................................................ 4
Objective .................................................................................................................................. 4
1.2
Outcomes ................................................................................................................................. 4
2.
Drought Concessional Loans ............................................................................................... 4
3.
Relationship with the Farm Finance Concessional Loans Scheme and the Drought
Recovery Concessional Loans Scheme .............................................................................. 5
4.
What is Eligible Debt?........................................................................................................... 5
5.
Eligible uses for a Drought Concessional Loan ................................................................. 5
5.1
Restructuring existing Eligible Debt ............................................................................................ 6
5.2
Operating Expenses ................................................................................................................... 6
5.3
Drought Recovery and Preparedness Activities ............................................................................ 7
6.
Funding availability ............................................................................................................... 7
7.
Costs ...................................................................................................................................... 7
8.
How to apply and key dates ................................................................................................. 7
9.
Frequency of Applications ................................................................................................... 8
10.
Drought Concessional Loan assessment............................................................................ 8
11.
Eligibility criteria for Drought Concessional Loan assessment ........................................ 9
12.
Drought Concessional Loan assessment criteria ............................................................. 13
13.
Security ................................................................................................................................ 13
14.
14.1
Drought Concessional Loan terms and conditions .......................................................... 13
Loan terms ............................................................................................................................. 13
14.2
Concessional interest rate ........................................................................................................ 14
14.3
Drought Concessional Loan payment ........................................................................................ 14
14.4
Loan repayment ...................................................................................................................... 14
14.5
Extenuating Circumstances ...................................................................................................... 14
15.
Drought Concessional Loan Agreement ........................................................................... 15
15.1
Contracting arrangement ........................................................................................................ 15
15.2
Loan terms and conditions ....................................................................................................... 15
15.3
Loan reviews........................................................................................................................... 15
15.4
Reporting requirements ........................................................................................................... 16
16.
Decision making.................................................................................................................. 16
16.1
Review and appeal process ...................................................................................................... 16
16.2
Conflict of interest ................................................................................................................... 17
17.
Onus on the Applicant ........................................................................................................ 17
18.
Privacy statement ............................................................................................................... 17
19.
Disclaimer ............................................................................................................................ 18
20.
Monitoring and evaluation .................................................................................................. 18
21.
Review of guidelines ........................................................................................................... 18
22.
Definitions ........................................................................................................................... 18
Drought Concessional Loans Scheme at a glance
Key features of the Drought Concessional Loans Scheme:
 loans are for eligible Farm Businesses for the purposes of restructuring existing Eligible Debt (including a
Farm Finance Concessional Loan), providing new debt for Operating Expenses or Drought Recovery and
Preparedness Activities, or a combination of these
 a maximum loan term of five years
 loan amounts will be up to 50 per cent of total Eligible Debt to a maximum of $1 million
 a variable concessional interest rate as at 1 July 2015, 3.84 per cent, reviewed on a six-monthly basis
 a concessional interest period of five years
 interest only payments available for the loan term
 at the end of the loan term, the Farm Business must repay or refinance the remaining loan balance
 the availability of loans is subject to funds being available
 applications for the scheme will close on 30 June 2016.
Should you read on?
To help decide whether you and your Farm Business are eligible to be considered for a Drought
Concessional Loan (see Clauses 11 and 12 and Boxes 1-3) you should answer yes to these questions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Does my Farm Business have existing Eligible Debt?
Is my Farm Business experiencing a Significant Financial Impact, causing a financial need for assistance?
Is the Significant Financial Impact my Farm Business is experiencing the result of the effects of drought?
Is my Farm Business located within an area identified as having experienced a rainfall deficiency as
indicated in the Bureau of Meteorology’s ‘Rainfall Deficiency Report’?
Can I demonstrate that my Farm Business has taken reasonable steps to prepare for drought?
Is my Farm Business able to provide an acceptable Drought Management Plan?
Does my Farm Business have the support of its commercial lender(s)?
Can my Farm Business fully repay the Drought Concessional Loan within five years, for example, through
successfully obtaining commercial refinance at the end of the five year period?
Can my Farm Business provide adequate security for the Drought Concessional Loan?
To be eligible for a Drought Concessional Loan, you must:
1. Demonstrate that you and your Farm Business meet the Drought Concessional Loan eligibility criteria (see
Clause 11) and Drought Concessional Loan assessment criteria (see Clause 12).
2. Complete and submit an Application available at the Department of Primary Industries and Regions
(PIRSA) website (www.pir.sa.gov.au) with all the necessary supporting documentation including:
 the required evidence to demonstrate that your Farm Business is experiencing a Significant Financial
Impact, causing a financial need for assistance (see Box 1); and
 the required evidence to demonstrate that the Significant Financial Impact is a result of the effects of
drought (see Box 2); and
 the required evidence to demonstrate that you have taken reasonable steps to prepare your Farm
Business for the effects of drought, including through an acceptable Drought Management Plan (see
Box 3); and
 confirmation from your current commercial lender(s) of support if a Drought Concessional Loan is
approved.
3. Provide satisfactory security for the loan (see Clause 13).
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Drought Concessional Loans Scheme
These guidelines relate solely to the Drought Concessional Loans Scheme in South Australia.
1. Overview
1.1 Objective
The Drought Concessional Loans Scheme is part of an Australian Government drought assistance package
aimed at assisting Farm Businesses that are experiencing a Significant Financial Impact as a result of the
effects of drought.
Under the scheme, the Australian Government is making available Drought Concessional Loans to eligible
Farm Businesses, which can be used for the purposes of restructuring existing Eligible Debt (including a Farm
Finance Concessional Loan provided under the Farm Finance Concessional Loans Scheme), providing new debt
for Operating Expenses or Drought Recovery and Preparedness Activities, or a combination of these.
Drought Concessional Loans are designed to help Farm Businesses recover from and prepare for future
droughts and return to Commercial Viability in the long term.
1.2 Outcomes
The intended outcomes for the Drought Concessional Loans Scheme are that:

Drought Concessional Loans are available to Farm Businesses that are experiencing a Significant
Financial Impact as a result of the effects of drought and that are considered Commercially Viable in
the longer term; and

receipt of a Drought Concessional Loan provides the opportunity for Loan Recipients to continue their
operations, while recovering from the effects of drought, and return to Commercial Viability in the
longer term.
2. Drought Concessional Loans
Under the scheme, the Australian Government has provided South Australia with $10 million over
2014–15 and $10 million over 2015–16 for the provision of Drought Concessional Loans. Funding for
2015–16 may be increased, subject to demand and at the discretion of the Australian Government.
Applications for the Drought Concessional Loans Scheme will close on 30 June 2016, or earlier if funds
are fully committed.
The Australian Government will provide the loan funds to the South Australian Government Financing
Authority (SAFA). In accordance with applicable State Government financial arrangements, these funds will be
made available by SAFA to the Minister for Agriculture Food and Fisheries (as a body corporate) (the
‘Minister’). As the Minister’s representative Department, the Department of Primary Industries and Regions
(PIRSA) will administer and deliver the Drought Concessional Loans Scheme in South Australia, on the
Minister’s behalf.
The Minister (acting through PIRSA) will deliver the Drought Concessional Loans Scheme using the loan funds
provided by the Australian Government to SAFA. The Minister (acting through PIRSA) will enter into loan
arrangements with eligible Farm Businesses.
Drought Concessional Loans are available to eligible Farm Businesses for the purposes of restructuring existing
Eligible Debt (including a Farm Finance Concessional Loan), providing new debt for Operating Expenses or
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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Drought Recovery and Preparedness Activities, or a combination of these.
Drought Concessional Loans are available for a maximum loan term of five years at a variable concessional
interest rate (as at 1 July 2015, 3.84 per cent and reviewed six monthly). At the end of the loan term, Loan
Recipients will be required to fully repay their Drought Concessional Loans. Under Extenuating Circumstances,
loans may be considered for a further term of no more than two years; however, these loans will be subject to
commercial terms and conditions including principal and interest repayments.
3. Relationship with the Farm Finance Concessional Loans Scheme and
the Drought Recovery Concessional Loans Scheme
Loan recipients under the Farm Finance Concessional Loans Scheme and/or the Drought Recovery Concessional
Loans Scheme may also be eligible for a Drought Concessional Loan under the Drought Concessional Loans
Scheme .
A Drought Concessional Loan may be used to refinance an existing Farm Finance Concessional Loan only if:
• the entire Farm Finance Concessional Loan amount is fully refinanced; and
• the Farm Business meets the Drought Concessional Loans Scheme eligibility and loan
assessment criteria (see Clauses 11 and 12).
An Applicant may be eligible for both a Drought Concessional Loan and a Drought Recovery Concessional Loan
if the Farm Business meets the eligibility and loan assessment criteria outlined in each of the relevant scheme
guidelines. A Drought Recovery Concessional Loan can be used to refinance in full or in part the amount of an
existing Drought Concessional Loan provided for Operating Expenses and/or Drought Recovery and
Preparedness Activities.
The combined maximum loan amount available under the Drought Concessional Loans Scheme, the
Farm Finance Concessional Loans Scheme and the Drought Recovery Concessional Loans Scheme will be up to
50 per cent of total Eligible Debt to a maximum of $2 million in total.
The combined maximum loan amount available under the Drought Concessional Loans Scheme and the Farm
Finance Concessional Loans Scheme will be up to 50 per cent of total Eligible Debt to a maximum of $1 million.
An exception to this applies if the Drought Concessional Loan is used solely to refinance an existing Farm
Finance Concessional Loan. In such circumstances, an Applicant may obtain approval to refinance the entire
amount of their Farm Finance Concessional Loan. In all cases, the approved loan amount will be determined by
the Minister (acting through PIRSA).
4. What is Eligible Debt?
Eligible Debt means debt that has been established upon commercial interest rates, terms and conditions. For
the purpose of the Drought Concessional Loans Scheme, Eligible Debt also includes existing debt drawn under
the Farm Finance Concessional Loans Scheme.
The maximum amount of a Drought Concessional Loan cannot be more than 50 per cent of the total Eligible
Debt of the Farm Business (unless an Applicant is seeking to solely refinance its existing Farm Finance
Concessional Loan as outlined above).
5. Eligible uses for a Drought Concessional Loan
Drought Concessional Loans are available for the purposes of restructuring existing Eligible Debt (including a
Farm Finance Concessional Loan), providing new debt for Operating Expenses or Drought Recovery and
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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Preparedness Activities, or a combination of these.
5.1
Restructuring existing Eligible Debt
Drought Concessional Loans in South Australia are available to restructure Farm Business-related debt that has
been established upon commercial interest rates and terms and conditions or under the Farm Finance
Concessional Loans Scheme. Farm Finance Concessional Loans being refinanced must be approved and drawn
in the Applicant’s name.
Drought Concessional Loans in South Australia are available to fully refinance an existing Farm Finance
Concessional Loan.
Examples of ineligible debt include, but are not limited to:

private debt or family debt not provided at arm’s length and at commercial interest rates and terms and
conditions

non-balance sheet loans

equipment finance facilities; trade creditors

funding of normal or additional working capital

shareholder loans

debt created to purchase non-farm assets but secured by farm assets.
5.2
Operating Expenses
Drought Concessional Loans are available to assist in funding Operating Expenses that are necessary to
continue the normal operations of the Farm Business.
The full amount of a Drought Concessional Loan may be used for Operating Expenses.
Examples of eligible Operating Expenses may include:

paying outstanding bills on hand

paying salaries or wages of employees

paying creditors

paying farm rent or rates

buying goods that are essential to carry on the Farm Business, for example, fuel and other farm inputs

buying fodder or carting of water for livestock or produce or transporting livestock or produce.
Examples of ineligible Operating Expenses include, but are not limited to:

purchase of private and domestic assets

payment of private and domestic expenses

purchase of land

purchase of and/or investment in Non-Farm Assets and expenses

payment of tax and other statutory and legal payments

debt refinancing/restructuring

costs associated with family succession arrangements

Applicant’s own labour costs

reimbursement for depreciation of assets

payment of dividends or other distributions of equity to owners.
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5.3
Drought Recovery and Preparedness Activities
Drought Concessional Loans are available to contribute to the cost of activities to recover from and prepare for
drought. These include income-generating recovery activities such as replanting and restocking as seasonal
conditions allow, and preparedness activities.
The full amount of a Drought Concessional Loan may be used for Drought Recovery and Preparedness
Activities.
Examples of ineligible Drought Recovery and Preparedness Activities include, but are not limited to:

purchase of private and domestic assets

payment of private and domestic expenses

purchase of land

purchase of and/or investment in Non-Farm Assets and expenses

debt refinancing/restructuring

costs associated with family succession arrangements

Applicant’s own labour costs

reimbursement for depreciation of assets

purchase of capital equipment, except in limited circumstances where the delivery agency assesses that the
purchase is essential to the Farm Business’s drought recovery and preparedness.
6. Funding availability
The availability of loans is subject to funds being available. Once the funding allocation is exhausted, no more
funding will be made available to jurisdictions. Applications for the Drought Concessional Loans Scheme will
close when funding is fully committed or on 30 June 2016.
If the funding allocation is fully committed, no further Applications will be considered. If this happens,
notification of the early closure will be publicised on PIRSA’s website (www.pir.sa.gov.au) and those who
have already lodged an Application will be advised in writing.
Details of when the Drought Concessional Loans Scheme will be open for Applications will be announced and
published on PIRSA website (www.pir.sa.gov.au).
7. Costs
Applicants are responsible for all costs incurred in the preparation and lodgment of their loan Application.
Successful Applicants will be required to pay any actual costs associated with establishing the loan (e.g. title
searches, mortgage registrations, personal property securities register searches and registrations, personal and
corporate background checks, review of trust deeds borrowing powers, changes to security during the loan
term, and discharge of securities when loan is repaid).
Loan Recipients entering into a variation to loan agreement under Extenuating Circumstances will also be
required to pay administrative costs.
8. How to apply and key dates
Details of when the Drought Concessional Loans Scheme will be open for Applications for the 2015-16 financial
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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year will be announced on PIRSA’s website (www.pir.sa.gov.au). You can also call PIRSA on 1800 182 235 (free
call) for more information on the scheme.
Information relating to the Drought Concessional Loans Scheme, including an application form and these
guidelines, is available on PIRSA website (www.pir.sa.gov.au).
Eligible Applicants should lodge completed application forms including required documentation to PIRSA at:
Post:
PIRSA
Prudential and Rural Financial Services
GPO Box 1671
ADELAIDE SA 5001
Email:
PIRSA.RuralFinance@sa.gov.au
Fax:
08 8226 0229
In person: Reception
Primary Industries and Regions SA
Level 14, 25 Grenfell Street
Adelaide SA 5001
Applications must be received by PIRSA no later than the closing date. Applications can be lodged by post,
facsimile, email or personal delivery.
Applications submitted by facsimile or email must be received by 5pm on the application period closing date.
Posted Applications should be post marked or show other evidence of dispatch by no later than the closing time
and date prescribed for the application period.
Applications lodged after the advertised application period closing date, in any other circumstances will not be
accepted.
If the funding allocated in the application period is fully committed before the closing date, all subsequent
Applications will be declined.
Complete Applications will be assessed and funding provided in the order of receipt at the discretion of the
Minister (acting through PIRSA).
9. Frequency of Applications
If an Application is declined and an Applicant’s position subsequently changes, an Applicant can reapply by
30 June 2016, provided the Drought Concessional Loans Scheme is still open for applications at that time.
A Loan Recipient may receive only one Drought Concessional Loan.
10. Drought Concessional Loan assessment
In order for an Application for a Drought Concessional Loan to be assessed, Applicants must lodge a completed
Application with all the required supporting documentation. Incomplete Applications will not enter the
assessment queue. As the funds available under the Drought Concessional Loans Scheme are capped,
Applicants should note that lodging an Application does not guarantee that they will receive a Drought
Concessional Loan.
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Applicants will be assessed on the eligibility and assessment criteria in place at the time they lodge a completed
Application, noting that these criteria may be reviewed and amended in the future. Completed Applications will
be assessed in the order of receipt. Loan offers will also be based on the availability of funds.
PIRSA may liaise with the Applicant, their bankers and professional advisors and the Bureau of Meteorology as
required to confirm and verify documentary evidence and information provided.
Where necessary, PIRSA has the right to request further information from the Applicant to assess their
Application on behalf of the Minister. If an Applicant does not provide the required supporting
documentation, their Application will be declined.
11. Eligibility criteria for Drought Concessional Loan assessment
To be eligible for a Drought Concessional Loan in South Australia, an Applicant must demonstrate that:
a.
their Farm Business has existing Eligible Debt; and
b.
their Farm Business is experiencing a Significant Financial Impact, causing a financial need for a Drought
Concessional Loan; and
c.
the Significant Financial Impact experienced by their Farm Business is the result of the effects of
drought; and
d.
their Farm Business has taken reasonable steps to prepare for the effects of drought, including the
provision of an acceptable Drought Management Plan; and
e.
they have owned and operated the Farm Business for at least the past three consecutive years and
their Farm Business:
i. operates as a sole trader, trust, partnership or private company; and
ii. is involved within the agricultural, horticultural, pastoral, apicultural or aquacultural
industries; and
iii. is wholly located in Australia; and
iv. is registered for tax purposes in Australia with an Australian Business Number (ABN) and is
registered for GST; and
v. is not a public company under the meaning of the Corporations Act 2001 (Cth); and
f.
at least one Member of the Farm Business must be a Farmer who, under normal circumstances,
contributes at least 75 per cent of his or her labour and derives at least 50 per cent of his or her income
from the Farm Business; and
g.
the majority of their Farm Business is conducted in South Australia; and
h.
at least one Member of the Farm Business is an Australian permanent resident; and
i.
their Farm Business can secure the support of its commercial lender to the proposed arrangements for
the Drought Concessional Loan; and
j.
their Farm Business is not under External Administration or bankruptcy; and
k.
their Farm Business has not received a loan under the Drought Concessional Loans Scheme in any
jurisdiction.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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Box 1: How can I show that my Farm Business is experiencing a Significant Financial
Impact? - Clause 11(b)
In relation to Clause 11(b), an Applicant must demonstrate that their Farm Business is experiencing a
Significant Financial Impact, which has caused a financial need for assistance.
The impact must occur over at least a two year period, and can include the forthcoming season, where an
Applicant can demonstrate the Farm Business will continue to experience a Significant Financial Impact.
Evidence that the Farm Business is experiencing a Significant Financial Impact may include:
 large reductions in the Farm Business’s net cash flow
 large reductions in production and/or yields
 large reductions in operating margins (the percentage margin of farm receipts over farm Operating
Expenses)
 increases in drought-related Operating Expenses, particularly fodder and agistment expenditure
 large reductions in livestock numbers through forced sales or losses.
These impacts should be evident in the Farm Business’s financial statements, taxation returns and cash flow
statements provided with the Application.
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Box 2: How can I show that the Significant Financial Impact experienced by my Farm
Business is a result of the effects of drought? - Clause 11(c)
Applicants must submit a valid Bureau of Meteorology ‘Rainfall Deficiency Report’ as part of their Application.
‘Rainfall Deficiency Reports’ are valid for a period of 60 days from the date they are issued or accessed.
This report from the Bureau of Meteorology identifies those areas within Australia that have experienced one
of the following two rainfall deficiencies, which extend 12 months or more. The 12 month period needs to be
continuous, in whole months (i.e. not part of a month) and wholly within the last two years.
The report will show whether your Farm Business is located in an area experiencing:
1. a rainfall deficiency, which is equivalent to, or worse than, a 1 in 20 year rainfall event (a rainfall
deficiency at or below the 5th percentile), or
2. a rainfall deficiency, which is equivalent to, or worse than, a 1 in 10 year rainfall event (a rainfall
deficiency at or below the 10th percentile).
Note: if your ‘Rainfall Deficiency Report’ outcome is not listed above, you are not eligible for assistance under
the Drought Concessional Loans Scheme.
Where a valid ‘Rainfall Deficiency Report’ identifies that an Applicant’s Farm Business has experienced a
rainfall deficiency, equivalent to, or worse than, a 1 in 20 year rainfall event (as per point 1 above):
Then the ‘Rainfall Deficiency Report’ will be considered evidence that the financial impacts being experienced
by the Applicant’s Farm Business are a result of the effects of drought.
Where a valid ‘Rainfall Deficiency Report’ identifies that an Applicant’s Farm Business has experienced a
rainfall deficiency, equivalent to, or worse than, a 1 in 10 year rainfall event (as per point 2 above):
Then the Applicant must provide evidence of significantly reduced income and/or significantly increased
expenditure that is directly related to drought conditions.
This evidence may include the following (as relevant):
 forced destocking through forced sales and movement of stock to agistment or feedlots
 feeding purchased fodder to drought affected stock
 purchasing water supplies for drought affected stock and/or crops
 crop failure or reduced yields owing to drought
 expenditure related to assisting the business recover from drought conditions (e.g. restocking,
de-silting of dams, replanting)
 other drought management strategies adopted to manage the farm business both over the duration
of the drought conditions and its recovery phase.
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Box 2: How can I show that the Significant Financial Impact experienced by my Farm
Business is a result of the effects of drought? - Clause 11(c) (continued)
Evidence of the above examples (as relevant) should be provided through an acceptable Drought Management
Plan and the Farm Business’s financial statements provided with the Application.
Applicants must also demonstrate that they have not contributed to the Significant Financial Impact being
experienced by their Farm Business, for example by adopting poor management practices such as
overstocking.
Accessing the Bureau of Meteorology’s ‘Rainfall Deficiency Report’:
Information about how to obtain the Bureau of Meteorology’s ‘Rainfall Deficiency Report’ is available on
PIRSA’s website (www.pir.sa.gov.au) or by contacting PIRSA on 1800 182 235 (free call).
If Applicants are unable to obtain this report (e.g. because they are unable to access internet facilities, or due to
technical difficulties with the website), they may request a report be sent to them via facsimile or post. Please
contact PIRSA for further information on how to access this support.
Important additional information:
When assessing Applicants, PIRSA (on behalf of the Minister) will verify the information provided by Applicants
in their Applications.
Box 3: What are considered reasonable steps to prepare for the effects of drought? Clause 11(d)
In relation to Clause 11(d), an Applicant must demonstrate that they have taken reasonable steps to prepare
their Farm Business for the effects of drought. For example, by providing evidence of some of the following
steps:
 use of weather and seasonal climate forecasting products or tools to inform production decisions
 proactive water management measures, such as increasing dam capacity, investment in water reticulation
and groundwater infrastructure
 water-efficient cropping techniques
 reduction or agistment of stock
 accumulation of feed reserves for stock or sale.
Evidence of the above should be demonstrated through an acceptable Drought Management Plan provided by
Applicants in their Application. A template is available on PIRSA’s website (www.pir.sa.gov.au) if required.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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12. Drought Concessional Loan assessment criteria
Applications will be assessed by the Minister (acting through PIRSA) against the loan assessment criteria in
place at the time their completed Application is lodged, noting that these criteria may be reviewed and
amended in the future.
An Eligible Applicant for a Drought Concessional Loan must demonstrate that:
a.
their Application is for the purposes:
i.
of restructuring existing Eligible Debt (including a Farm Finance Concessional Loan); or
ii.
of providing new debt for Operating Expenses; or
iii.
of funding Drought Recovery and Preparedness Activities; or
iv.
a combination of i) to iii); and
b.
their Farm Business has the capacity to repay the Drought Concessional Loan and has sound prospects
for a return to Commercial Viability within the term of the Drought Concessional Loan; and
c.
the amount of Non-Farm Assets and Liquid Assets owned by the Applicant or the Members of the Farm
Business is not more than the amount needed for prudent risk management; and
d.
they are able to provide satisfactory security acceptable to the Minister (acting through PIRSA) (see
Clause 13).
13. Security
Successful Applicants must provide the Minister (acting through PIRSA) with satisfactory security in
accordance with PIRSA’s established security requirements.
The security provided must include:

a registered mortgage over land or other assets satisfactory to PIRSA; and

any other security PIRSA considers necessary.
Where applicable, assets provided as security must be insured (e.g. against fire) to the satisfaction of PIRSA.
Applicants are advised that the Minister (acting through PIRSA) reserves the right to act under its securities
where terms and conditions are not met or default occurs.
14. Drought Concessional Loan terms and conditions
14.1 Loan terms
a.
b.
c.
d.
e.
f.
g.
the maximum term of a Drought Concessional Loan is five years
a variable concessional interest rate will apply to Drought Concessional Loans
Successful Applicants must sign a Drought Concessional Loan Agreement with the Minister (acting
through PIRSA) and provide satisfactory security
Successful Applicants will be required to pay actual costs associated with the establishment of the loan
(e.g. searches and registrations and review of trust deeds borrowing powers)
Loan Recipients will be required to fully repay their Drought Concessional Loan by the end of the loan
term
Drought Concessional Loan funds cannot be used for activities previously funded under
Commonwealth and state and territory government schemes
In no circumstances can Loan Recipients redraw on repaid Drought Concessional Loan amounts.
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Full details of individual loan terms and conditions will be set out in the Drought Concessional Loan
Agreement.
14.2 Concessional interest rate
A concessional variable interest rate will apply for the five year concessional loan period. An initial variable
interest rate of 4.0 per cent was set by the Australian Government. This rate is reviewed and revised if
necessary in accordance with material changes to the Commonwealth five year bond rate. A material change
is taken to be a movement of 10 basis points (0.1 per cent per annum).
The concessional variable interest rate is published on PIRSA’s website (www.pir.sa.gov.au) and the
Department of Agriculture and Water Resource’s website (www.agriculture.gov.au). The Drought
Concessional Loans Scheme’s interest rate is set 50 basis points (0.5 per cent) below the Farm Finance
Concessional Loans Scheme’s interest rate.
Any interest rate change will be effective from 1 February and/or 1 August each year as applicable. Loan
Recipients will be notified by the Minister (acting through PIRSA) in writing and via PIRSA’s website
(www.pir.sa.gov.au) when the changes take effect.
As at 1 July 2015, the interest rate is 3.84 per cent.
14.3 Drought Concessional Loan payment
The full amount of the Drought Concessional Loan will be paid by the Minister (acting through PIRSA) to the
Loan Recipient’s nominated bank accounts. Details for payment of the loan will be specified in the Drought
Concessional Loan Agreement.
A Loan Recipient must fully draw-down their Drought Concessional Loan from PIRSA in one tranche within six
months of approval or as otherwise agreed with the Minister (acting through PIRSA).
14.4 Loan repayment
The repayment amounts and repayment frequency offered to Successful Applicants will be determined by
the Minister (acting through PIRSA) based on its assessment and will be detailed in the Drought
Concessional Loan Agreement. The minimum repayment in the five year concessional period is the
interest component.
Conditions relating to loan repayments, arrears, defaults and penalties will be as detailed by the Minister
(acting through PIRSA) in the Drought Concessional Loan Agreement. At any time during the five year
term of the Drought Concessional Loan, Loan Recipients may prepay the whole or any part of their loan,
without incurring any additional fees with the exception of security discharge and settlement costs.
In circumstances where Loan Recipients enter into a variation to loan agreement under Extenuating
Circumstances, loan repayments will be on a principal and interest basis and administrative costs will apply.
14.5 Extenuating Circumstances
At the completion of the Drought Concessional Loan term any outstanding loan balance must be fully repaid,
unless a Loan Recipient can demonstrate Extenuating Circumstances to the Minister (acting through PIRSA).
To be considered for Extenuating Circumstances by the Minister (acting through PIRSA), a Loan Recipient’s
Farm Business must:
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
demonstrate it is genuinely unable to access finance on normal commercial terms and conditions to
repay its Drought Concessional Loan; and

be assessed as having sound prospects of being able to transition to commercial lending arrangements
within a period of no longer than two years from the expiry of the Drought Concessional Loan.
Loan Recipients who can demonstrate Extenuating Circumstances will be required to enter into a varied loan
agreement with an extension of no more than two years for the expiry of the Drought Concessional Loan to
repay their loan. The Minister (acting through PIRSA) will determine the applicable interest rate for the varied
loan, including any adjustments to the rate. The varied loan agreement will be subject to commercial terms
and conditions. Loan Recipients will be required to make principal and interest repayments and pay any other
administrative costs as detailed in a variation to loan agreement.
15. Drought Concessional Loan Agreement
15.1 Contracting arrangement
Successful Applicants will be required to enter into a Drought Concessional Loan Agreement with the Minister.
The Drought Concessional Loan Agreement will be for the term of the loan. The Drought Concessional Loan
offer may lapse if not signed by the Successful Applicant, in a timeframe specified by the Minister (acting
through PIRSA). Applicants should note that no contractual arrangement will exist with the Minister until a
Drought Concessional Loan Agreement and relevant security documentation is signed by both the Successful
Applicant and the Minister (acting through PIRSA).
15.2 Loan terms and conditions
By signing the Drought Concessional Loan Agreement, the Successful Applicant agrees that they are subject to
compliance requirements specified in the Drought Concessional Loan Agreement.
If any information provided in the Application is found to be untrue, false or misleading, recovery action of the
loan may be undertaken, penalties may be applied under the relevant South Australian legislation and the
matter may be referred to the relevant law enforcement authorities of the South Australia or Australian
governments. Applicants should be aware that giving false or misleading information is a serious offence under
the Criminal Code Act 1995 (Cth).
It is a condition of the Drought Concessional Loan Agreement that if a Loan Recipient’s circumstances change
significantly during the term of the loan they are required to advise the Minister (through PIRSA).
If a Loan Recipient’s financial position changes significantly, or there are any breaches of the terms and
conditions of the loan as specified in these guidelines and the Drought Concessional Loan Agreement, the
Minister (acting through PIRSA) may decide to initiate recovery or other remedial actions as specified under
the Drought Concessional Loan Agreement.
15.3 Loan reviews
Loans will be reviewed at least annually by the Minister (acting through PIRSA), in consultation with a Loan
Recipient’s commercial lender, to monitor compliance and ongoing capacity of the Farm Business to meet the
terms and conditions of the Drought Concessional Loan Agreement. A review will include ensuring funds
provided for Operating Expenses and/or Drought Recovery and Preparedness Activities have been used for
eligible or approved purposes. Loans provided for Operating Expenses and/or Drought Recovery and
Preparedness Activities may be subject to more frequent reviews by the Minister (acting through PIRSA). The
Loan Recipient will be provided by the Minister (through PIRSA) with at least two months notice of a loan
review. The final loan review will be conducted 12 months prior to the expiry of the loan term and will include
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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an assessment by the Minister (acting through PIRSA) of a Loan Recipient’s capacity to repay the loan by the
expiry of the Drought Concessional Loan term.
Loan Recipients of funding for Operating Expenses and/or Drought Recovery and Preparedness Activities must
provide evidence of expenditure upon request by the Minister (through PIRSA) for amounts drawn by the Farm
Business against the Drought Concessional Loan. Evidence of expenditure includes all tax invoices, Official
Receipts, bank statements or other similar records of amounts paid.
In assessing a Farm Business’s compliance with terms and conditions of the Drought Concessional Loan
Agreement with respect to expenditure and activities undertaken, consideration will be given to the
expenditure and activities identified in the Farm Business’s Drought Management Plan.
15.4 Reporting requirements
Loan Recipients will be required to provide information in line with the reporting requirements as stipulated
in the Drought Concessional Loan Agreement.
16. Decision making
In administering the Drought Concessional Loans Scheme on behalf of the Minister, PIRSA will use its expertise
to assess and decide Applications for Drought Concessional Loans, in accordance with these guidelines.
The Minister, through PIRSA, will provide formal written notification of the assessment outcome to each
Applicant, including reasons for the decision to declined Applicants.
16.1 Review and appeal process
Requests to review a decision must be submitted in writing to PIRSA within 20 business days of receipt of the
original decision notification from the Minister (acting through PIRSA).
Applicants should ensure they provide PIRSA with sufficient information outlining the reasons for their
dissatisfaction with the decision. Examples may include:

disagreement with the assessment of the eligibility criteria on which the Application was unsuccessful

factors an Applicant believes may have been overlooked by PIRSA in determining eligibility to receive a
Drought Concessional Loan

relevant information an Applicant believes may have assisted the original Application, but may not
have been included for consideration.
Within 30 business days of receiving a request for a review of a decision, PIRSA will review the decision, make a
decision on behalf on the Minister regarding the review, and give notice to the Applicant of the review
decision.
Applicants dissatisfied with this decision are entitled to appeal the decision to the South Australian
Ombudsman.
Written requests to review a decision should be forwarded to:
PIRSA Prudential and Rural Financial Services
GPO Box 1671
ADELAIDE SA 5001
The South Australian Ombudsman contact details are:
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR SOUTH AUSTRALIA JULY 2015
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Level 5, East Wing
50 Grenfell Street
Adelaide SA 5000
Telephone: 08 8226 8699
Toll free: 1800 182 150 (outside metro SA only)
Email: ombudsman@ombudsman.sa.gov.au
16.2 Conflict of interest
In line with PIRSA’s policy for managing conflicts of interest, PIRSA will take all reasonable measures to
ensure its officers involved in assessing and making decisions on behalf of the Minister in relation to
Applications under the Drought Concessional Loans Scheme do not have any conflicts of interest.
17. Onus on the Applicant
Applicants are responsible for ensuring they have read and understood these guidelines and all documents
referred to in these guidelines.
Before applying for a Drought Concessional Loan under this scheme or making any decision, Applicants should
seek advice from their legal, business and financial advisors.
It is the Applicant’s responsibility, if successful, to ensure they have read and understood all aspects of the
loan conditions and the Drought Concessional Loan Agreement terms and conditions.
Applicants should note that past financial assistance under any other program (including loans
approved under the Farm Finance Concessional Loans Scheme or Drought Recovery Concessional Loans
Scheme) is not a reliable indicator of eligibility for a Drought Concessional Loan under this scheme.
Applicants can contact the Australian Taxation Office call centre to discuss business tax enquiries on
13 28 66.
18. Privacy statement
Information provided by Applicants may be used by the Minister, PIRSA and/or the Australian Government for
administration of the Drought Concessional Loans Scheme and assessment of an Application. Provision of
information (personal or otherwise) constitutes the Applicant's consent to the Minister, PIRSA and/or the
Australian Government using the information for the above mentioned purposes and any other incidental or
related purpose. The Minister, PIRSA and/or the Australian Government may disclose your personal
information to any party engaged in the assessment or evaluation of the Drought Concessional Loans Scheme
in any jurisdiction. The Minister, PIRSA and/or the Australian Government will store personal information
collected through the Application, supporting documentation, the Drought Concessional Loan Agreement and
any monitoring and evaluation activities in compliance with their respective obligations under the State
Records Act 1997 (SA), Freedom of Information Act 1991 (SA) the Privacy Act 1988 (Cth) and the Information
Privacy Principles Instruction also known as Cabinet Administrative Instruction 1/89 and Premier and Cabinet
Circular 12, amended by Cabinet 16 September 2013 and as amended from time to time. Your information will
not be disclosed overseas. You may access or correct your personal information at any time by contacting
PIRSA via email or in writing to the address provided on the front page of these guidelines. Further information
about the relevant Australian Government privacy policy, including rights of access and complaints handling,
may be accessed at http://www.daff.gov.au/about/privacy or by calling 1800 900 090.
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19. Disclaimer
The Minister, PIRSA and the Australian Government do not accept any common law duty of care towards
Applicants in relation to the Drought Concessional Loans Scheme or any information provided in relation to
the Drought Concessional Loans Scheme and the Minister, PIRSA and the Australian Government will not be
liable for any loss or damage however caused (including the negligence of the Minister, PIRSA and the
Australian Government), suffered or incurred by Applicants in connection with the Drought Concessional
Loans Scheme or any information provided by the Minister or PIRSA acting on behalf of the Minister and the
Australian Government in relation to the Drought Concessional Loans Scheme.
20. Monitoring and evaluation
The Australian Government will conduct an evaluation to determine the extent to which the Drought
Concessional Loans Scheme is contributing to Australian Government policy objectives. Loan Recipients may
be requested to provide information to assist in the evaluation at times during the loan period.
21. Review of guidelines
The Australian Government reserves the right to review, revoke or vary these guidelines, in
consultation with PIRSA, at any time. Potential Applicants will be advised of revised guidelines through
PIRSA’s website (www.pir.sa.gov.au).
22. Definitions
Applicant: means an owner of a Farm Business that has lodged an Application for a Drought Concessional Loan.
Application: means the Drought Concessional Loan Scheme application form and associated documentation
that an Applicant must complete and lodge with PIRSA to apply for a Drought Concessional Loan.
Commercial Viability: a Farm Business is commercially viable when the business generates
sufficient net profit after fixed and variable expenses to:

service borrowings at commercial interest rates; and

allow investment on-farm to maintain the farm’s productive assets; and

provide for an adequate standard of living for its Members of the Farm Business; and

provide funds for investment which increases long-term productivity.
Drought Concessional Loan: means a loan provided under the Drought Concessional Loans Scheme at a
concessional interest rate made by the Minister (acting through PIRSA) to Successful Applicants using funds
provided by the Australian Government.
Drought Concessional Loan Agreement: means the contractual agreement between a Successful Applicant
and the Minister which details the terms and conditions of the loan for the duration of the loan until fully
repaid.
Drought Concessional Loans Scheme: means an Australian Government initiative that makes available Drought
Concessional Loans, which can assist Farm Businesses to continue their operations while recovering from the
effects of drought and return to Commercial Viability in the long term.
Drought Management Plan: means a document which outlines how the Applicant’s Farm Business has been
affected by drought and the drought management strategies to be adopted to manage the Farm Business
over the duration of the Drought Concessional Loan.
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Drought Recovery and Preparedness Activities: means activities that are undertaken with the aim of helping a
Farm Business return to Commercial Viability and/or improving a Farm Business’s long term productive
capacity.
Drought Recovery Concessional Loan: means a concessional loan that a Farm Business has received under
the existing Drought Recovery Concessional Loans Scheme.
Drought Recovery Concessional Loans Scheme: means an Australian Government initiative that assists
eligible Farm Businesses to recover from the effects of drought and other business impacts, and return to
Commercial Viability in the longer term by providing concessional loans for the purposes of Planting and/or
Restocking drought recovery activities (as seasonal conditions allow) and associated expenses.
Eligible Applicant: means the Farm Business whose Application is eligible to be assessed for a Drought
Concessional Loan by the Minister (acting through PIRSA), in accordance with these guidelines.
Eligible Debt: means debt that has been established upon commercial interest rates, terms and conditions.
Eligible debt for the purpose of the Drought Concessional Loans Scheme also includes existing debt drawn
under the Farm Finance Concessional Loans Scheme.
Extenuating Circumstances: Refer to clause 14.5.
External Administration: means, in respect of a body corporate, that an administrator has been appointed in
accordance with the Corporations Act 2001 (Cth).
Farmer: means a person who has a right or interest in the land used for the purposes of a Farm Business
(as defined in the Farm Household Support Act 1992 (Cth)).
Farm Business: means a business that:
a.
operates as a sole trader, trust, partnership or private company; and
b.
is involved within the agricultural, horticultural, pastoral, apicultural or aquacultural industries; and
c.
is wholly located in Australia; and
d.
is registered for tax purposes in Australia with an Australian Business Number (ABN) and is registered
for GST; and
e.
is not a public company under the meaning of Corporations Act 2001 (Cth).
Farm Finance Concessional Loan: means a concessional loan that a Farm Business has received under the
existing Farm Finance Concessional Loans Scheme.
Farm Finance Concessional Loans Scheme: means an Australian Government initiative which assists eligible
Farm Businesses experiencing debt servicing difficulties by providing concessional loans for debt
restructuring or productivity enhancement activities.
Farm Management Deposits: means a scheme provided by the Australian Government to assist primary
producers to deal more effectively with fluctuations in cash flow.
Liquid Assets: means immediate funds, including cash immediately available in personal and business
bank accounts, term deposits, shares, Farm Management Deposits and other financial accounts.
Loan Recipient: means a Successful Applicant that receives a loan through the Drought Concessional Loans
Scheme.
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Member(s) of the Farm Business: means a person who has a right or interest in a Farm Business.
Minister means the Minister for Agriculture Food and Fisheries established as a body corporate under the
Administrative Arrangements Act 1994 (SA).
Non-Farm Assets: means the net value of any asset not essential to the effective running of the Farm
Business, including land or property, residential (not used as the primary place of residence) or business, for
the Applicant or any Member of the Farm Business (as applicable), excluding life insurance policies and
superannuation, provided the superannuation is in a complying superannuation fund for the purposes of the
Superannuation Industry (Supervision) Act 1993 (Cth).
Official Receipt: means a receipt including:
a.
the name and address of the entity that issued the receipt; and
b.
if the entity has an Australian Business Number – the Australian Business Number; and
c.
a description of each item to which the receipt relates.
Operating Expenses: means the day-to-day costs of operating a Farm Business in order to derive Farm Business
income. Such costs may include rates, fertiliser, hired labour costs, interest payments and accountancy. It
excludes items whose use normally extends for more than the current accounting period (normally one year)
such as purchase of capital items such as vehicles, land or livestock.
Operating Expenses does not include payment of private and domestic expenses or purchase of private or
domestic assets or any item that is effectively a distribution of the Farm Business’s profits such as drawings or
wages paid to partners in the Farm Business.
PIRSA: means the Department of Primary Industries and Regions, an administrative unit established pursuant to
the Public Sector Act 2009 (SA) delivering the Drought Concessional Loans Scheme in South Australia on behalf of
the Minister.
‘Rainfall Deficiency Report’: means a report from the Bureau of Meteorology that identifies those areas within
Australia that have experienced a rainfall deficiency equivalent to, or worse than, a 1 in 20 year rainfall event (a
rainfall deficiency at or below the 5th percentile) or a rainfall deficiency equivalent to, or worse than, a 1 in 10
year rainfall event (a rainfall deficiency at or below the 10th percentile). The map included in the report is
updated each month by the Bureau of Meteorology to reflect changes to estimated rainfall deficiencies. ‘Rainfall
Deficiency Reports’ are valid for a period of 60 days from the date they are issued or accessed. Information
about how to obtain the Bureau of Meteorology’s ‘Rainfall Deficiency Report’ is available on PIRSA’s website
(www.pir.sa.gov.au) or by contacting PIRSA on 1800 182 235 (free call).
Significant Financial Impact: means an adverse financial impact on a Farm Business that must occur over at
least a two year period, and can include the forthcoming season. Evidence that the Farm Business is
experiencing a Significant Financial Impact may include:

large reductions in the Farm Business’s net cash flow

large reductions in production and/or yields

large reductions in operating margins (the percentage margin of farm receipts over farm Operating
Expenses)

increases in drought-related Operating Expenses, particularly fodder and agistment expenditure

large reductions in livestock numbers through forced sales or losses.
Successful Applicant: means an Eligible Applicant that satisfies the loan assessment criteria and has been
offered a loan through the Drought Concessional Loans Scheme.
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