DROUGHT CONCESSIONAL LOANS SCHEME
These guidelines relate solely to the Drought Concessional Loans Scheme in the Northern Territory.
SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
FOR FURTHER INFORMATION:
Telephone
(08) 8936 4089
Fax
(08) 8999 2010
Post
Drought Concessional Loans Scheme
C/- NT Department of Primary Industry and Fisheries
GPO Box 3000
Darwin NT 0801
Website
Email
www.nt.gov.au/d/primary_industry
industry.programs@nt.gov.au
Table of contents
Drought Concessional Loans Scheme at a glance......................................................................... 3
1.
Overview ................................................................................................................................ 4
1.1
Objective .................................................................................................................................. 4
1.2
Outcomes ................................................................................................................................. 4
2.
Drought Concessional Loans ............................................................................................... 4
3.
Relationship between Farm Finance Concessional Loans and Drought Concessional
Loans ..................................................................................................................................... 5
4.
What is Eligible Debt?........................................................................................................... 5
5.
Eligible uses for a Drought Concessional Loan ................................................................. 5
5.1
Restructuring existing Eligible Debt ............................................................................................ 5
5.2
Operating Expenses ................................................................................................................... 6
5.3
Drought Recovery and Preparedness Activities ............................................................................ 6
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 ........................................ 8
12.
Drought Concessional Loan assessment criteria ............................................................. 11
13.
Security ................................................................................................................................ 12
14.
14.1
Drought Concessional Loan terms and conditions .......................................................... 12
Loan terms ............................................................................................................................. 12
14.2
Concessional interest rate ........................................................................................................ 13
14.3
Drought Concessional Loan payment ........................................................................................ 13
14.4
Loan repayment ...................................................................................................................... 13
14.5
Extenuating Circumstances ...................................................................................................... 13
15.
15.1
Drought Concessional Loan Agreement ........................................................................... 14
Contracting arrangement ........................................................................................................ 14
15.2
Loan terms and conditions ....................................................................................................... 14
15.3
Loan reviews........................................................................................................................... 14
15.4
Reporting requirements ........................................................................................................... 15
16.
16.1
Decision making.................................................................................................................. 15
Review and appeal process ...................................................................................................... 15
16.2
Conflict of interest ................................................................................................................... 16
17.
Onus on the Applicant ........................................................................................................ 16
18.
Privacy statement ............................................................................................................... 16
19.
Disclaimer ............................................................................................................................ 16
20.
Monitoring and evaluation .................................................................................................. 17
21.
Review of guidelines ........................................................................................................... 17
22.
Definitions ........................................................................................................................... 17
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 initially set at 4 per cent

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. The scheme will close on 30 June 2015.
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 Northern Territory Department of Primary Industry
and Fisheries (DPIF) website (www.nt.gov.au/d/primary_industry) 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).
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
3
Drought Concessional Loans Scheme
These guidelines relate solely to the Drought Concessional Loans Scheme in the Northern Territory.
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), 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

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 will provide the Northern Territory with $10 million for
the provision of Drought Concessional Loans. Once these funds are expended, no more loans will be
offered. The Drought Concessional Loans Scheme will close on 30 June 2015.
The Drought Concessional Loans Scheme in the Northern Territory will be delivered by QRAA, on behalf
of the Northern Territory Government, using funds provided by the Australian Government.
QRAA is a statutory authority of the Queensland Government and operates as a specialist administrator
of government financial assistance programs to the rural sector.
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 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 (initially set at 4 per cent). 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.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
4
3. Relationship between Farm Finance Concessional Loans and Drought
Concessional Loans
The Farm Finance Concessional Loans Scheme in the Northern Territory provides concessional loans for debt
restructuring to eligible Farm Businesses that are experiencing debt servicing difficulties. The Farm Finance
Concessional Loans Scheme is not specific to a reason for hardship.
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 if a Farm Business meets the Drought
Concessional Loans Scheme eligibility and loan assessment criteria (see Clauses 11 and 12).
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 QRAA, on behalf of the Northern Territory.
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
Preparedness Activities, or a combination of these.
5.1
Restructuring existing Eligible Debt
Drought Concessional Loans in the Northern Territory 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 the Northern Territory 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

funding of normal or additional working capital.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
5
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.
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
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
6

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. No more loans will be offered beyond the funding
the Northern Territory receives from the Australian Government at any given time. The scheme will close on
30 June 2015.
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 the Northern Territory Department of Primary Industry
and Fisheries (DPIF) website (www.nt.gov.au/d/primary_industry) 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 the DPIF website (www.nt.gov.au/d/primary_industry).
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, stamp duty, mortgage registrations, personal property securities register searches and registrations
and personal and corporate background checks).
Loan Recipients entering into a revised 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 will be announced on the
DPIF website (www.nt.gov.au/d/primary_industry). You can also call DPIF on (08) 8936 4089 for more
information on the scheme.
Information relating to the Drought Concessional Loans Scheme, including an application form and these
guidelines, is available on the DPIF website (www.nt.gov.au/d/primary_industry).
Eligible Applicants should lodge completed application forms including required documentation to QRAA at:
Post:
Drought Concessional Loans (Northern Territory)
C/- QRAA
GPO Box 211
Brisbane, Queensland, 4001
Email: contact_us@qraa.qld.gov.au
Fax:
(07) 3032 0300
Applications must be received by QRAA no later than the closing date. Applications can be lodged by post,
facsimile, or email.
Applications submitted by facsimile or email must be received by 5pm AEST on the application period closing
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
7
date.
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 QRAA.
9. Frequency of Applications
If an Application is declined and an Applicant’s position subsequently changes, an Applicant can reapply by
30 June 2015, 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.
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.
QRAA 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, QRAA has the right to request further information from the Applicant to assess their
Application. 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 the Northern Territory, 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
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
8
f.
g.
h.
i.
j.
k.
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
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
the majority of their Farm Business is conducted in the Northern Territory; and
at least one Member of the Farm Business is an Australian permanent resident; and
their Farm Business can secure the support of its commercial lender to the proposed arrangements for
the Drought Concessional Loan; and
their Farm Business is not under External Administration or bankruptcy; and
their Farm Business has not received a loan under the Drought Concessional Loans Scheme in any
jurisdiction.
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.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
9
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.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
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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 the
DPIF website (www.nt.gov.au/d/primary_industry) or by contacting the DPIF on (08) 8936 4089.
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 the DPIF for further information on how to access this support.
Important additional information:
When assessing Applicants, QRAA 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 the DPIF website
(www.nt.gov.au/d/primary_industry) if required.
12. Drought Concessional Loan assessment criteria
Applications will be assessed by QRAA, on behalf of the Northern Territory, against the loan assessment criteria
in place at the time their completed Application is lodged, noting that these criteria may be reviewed and
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
11
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 QRAA (see Clause 13).
13. Security
Successful Applicants must provide QRAA with satisfactory security in accordance with QRAA’s
established security requirements.
The security provided must include:

a registered mortgage over land or other assets satisfactory to QRAA; and

any other security QRAA considers necessary.
Where applicable, assets provided as security must be insured (e.g. against fire) to the satisfaction of QRAA.
Applicants are advised that QRAA 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 QRAA 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)
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.
Full details of individual loan terms and conditions will be set out in the Drought Concessional Loan
Agreement.
DROUGHT CONCESSIONAL LOANS – SCHEME GUIDELINES FOR THE NORTHERN TERRITORY
12
14.2 Concessional interest rate
A variable concessional interest rate will apply for the five year concessional loan period. An initial variable
interest rate of 4 per cent has been set by the Australian Government. This variable concessional interest
rate will be reviewed and revised if necessary in accordance with changes to the Farm Finance Concessional
Loans Scheme interest rate and will be maintained at 50 basis points below that rate (0.5 per cent).
The Farm Finance Concessional Loans Scheme interest rate is reviewed and revised if necessary by the
Australian Government on a six monthly basis 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).
If the interest rate is changed under the Farm Finance Concessional Loans Scheme, then the relevant change in
the interest rate will occur for the Drought Concessional Loans Scheme (as detailed above). The change will be
effective from 1 February and/or 1 August each year as applicable, from 2014 onwards. Loan Recipients will be
notified by QRAA in writing and via the DPIF website (www.nt.gov.au/d/primary_industry) when the changes
take effect.
14.3 Drought Concessional Loan payment
The full amount of the Drought Concessional Loan will be paid by QRAA, on behalf of the Northern Territory,
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 QRAA within six months of
approval or as otherwise agreed with QRAA.
14.4 Loan repayment
The repayment amounts and repayment frequency offered to Successful Applicants will be determined by
QRAA 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 QRAA 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.
In circumstances where Loan Recipients enter into a revised Drought Concessional 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 QRAA.
To be considered for Extenuating Circumstances by QRAA, a Loan Recipient’s Farm Business must:

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.
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Loan Recipients who can demonstrate Extenuating Circumstances will be required to enter into a revised loan
agreement with an extension of no more than two years for the expiry of the Drought Concessional Loan to
repay their loan. QRAA will determine the applicable interest rate for the revised loan, including any
adjustments to the rate. The revised 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 revised 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 QRAA. 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 QRAA. Applicants should note
that no contractual arrangement will exist with QRAA until a Drought Concessional Loan Agreement is signed
by the Successful Applicant.
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 Rural and Regional Adjustment Act 1994 (Qld)
and the matter may be referred to the relevant law enforcement authorities of the Queensland 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 QRAA.
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, QRAA,
following consultation with the Northern Territory, 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 QRAA, on behalf of the Northern Territory and 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 may 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 QRAA. The Loan Recipient will be provided
by QRAA with at least two months notice of a loan review. The final loan review will include an assessment by
QRAA 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 QRAA 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.
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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, QRAA, on behalf of the Northern Territory, will use
its expertise to assess and decide Applications for Drought Concessional Loans, in accordance with these
guidelines and the Rural and Regional Adjustment Act 1994 (Qld).
QRAA 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 QRAA within 20 business days of receipt of the
original decision notification from QRAA.
Applicants should ensure they provide QRAA with sufficient information outlining the reasons for their
dissatisfaction with the decision. Examples may include:

disagreement with QRAA’s advice of the eligibility criteria on which the Application was unsuccessful

factors an Applicant believes may have been overlooked by QRAA 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, QRAA’s Chief Executive Officer or
delegate will review the decision, make a decision 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 Queensland Ombudsman or
under the Judicial Review Act 1991 (Qld).
Written requests to review a decision should be forwarded to:
Chief Executive Officer
QRAA
GPO Box 211
BRISBANE QLD 4001
The Queensland Ombudsman contact details are:
GPO Box 3314
Brisbane QLD 4001
Telephone: 07 3005 7000
Free call: 1800 068 908
Email: ombudsman@ombudsman.qld.gov.au
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16.2 Conflict of interest
In line with DPIF’s policy for managing conflicts of interest, DPIF will take all reasonable measures to
ensure its officers involved in the Drought Concessional Loans Scheme do not have any conflicts of
interest.
In line with QRAA’s policy for managing conflicts of interest, QRAA will take all reasonable measures to
ensure its officers involved in assessing and making decisions 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) 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 DPIF, QRAA 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 DPIF, QRAA and/or the Australian
Government using the information for the above mentioned purposes and any other incidental or related
purpose. DPIF, QRAA 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. DPIF,
QRAA 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 Information Privacy Act 2009 (Qld) and the
Privacy Act 1988 (Cth). You may access or correct your personal information at any time by contacting DPIF or
QRAA via email or in writing to the address provided on the front page of these guidelines.
19. Disclaimer
DPIF, QRAA 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 DPIF, QRAA and the Australian Government will not be liable for any loss or
damage however caused (including the negligence of DPIF, QRAA and the Australian Government), suffered or
incurred by Applicants in connection with the Drought Concessional Loans Scheme or any information
provided by DPIF, QRAA and the Australian Government in relation to the Drought Concessional Loans
Scheme.
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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 DPIF, at any time. Potential Applicants will be advised of revised guidelines through
the DPIF website (www.nt.gov.au/d/primary_industry).
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 QRAA 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.
DPIF: means the Northern Territory Department of Primary Industry and Fisheries.
Drought Concessional Loan: means a loan provided under the Drought Concessional Loans Scheme at a
concessional interest rate made by QRAA, acting on behalf of the Northern Territory, to Successful Applicants
using funds provided to the Northern Territory by the Australian Government.
Drought Concessional Loan Agreement: means the contractual agreement between a Successful Applicant
and QRAA 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.
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.
Eligible Applicant: means the Farm Business whose Application is eligible to be assessed for a Drought
Concessional Loan by QRAA, in accordance with these guidelines.
Eligible Debt: means debt that has been established upon commercial interest rates, terms and conditions.
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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 Loan
Scheme.
Member(s) of the Farm Business: means a person who has a right or interest in a Farm Business.
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)
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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.
QRAA: means a statutory authority of the Queensland Government established under the Rural and Regional
Adjustment Act 1994 (Qld) delivering the Drought Concessional Loans Scheme in the Northern Territory on
behalf of DPIF.
‘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 the DPIF website
(www.nt.gov.au/d/primary_industry) or by contacting the DPIF on (08) 8936 4089.
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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