I am sure many people have heard of the Regional Investment Corporation.

For those who have not, it provides concessional rate loans for farmers who are going through some difficult circumstances, such as drought in SA.

It also has options to assist with succession planning or those new to farming.

One thing RIC is not is a lender of last resort.

I have been involved in facilitating a few of these loans over the years.

When RIC was set up it was apparent it was under-resourced.

From the outside it seemed like politicians made an announcement, but did not think through the resourcing required to meet the demand.

In more recent times, I have been involved in a couple of applications and the resourcing has seemed to have caught up with demand.

Economics 101 has come back into equilibrium.

One of my perceptions – which ended up being false – was that the assessors at RIC would have limited knowledge of agriculture.

Particularly, as the assessor is more than likely based in another state.

My experience was the opposite, the RIC staff had very sound agri knowledge.

RIC assesses loans in the same way a traditional bank does.

One of the key criteria is that the incumbent bank needs to be supportive of the application.

RIC cannot take over the entirety of the lending and can only hold up to 50 per cent of the farming businesses’ entire debt.

RIC is also very much a traditional bank in relation to its loan being secured by property.

This can take some navigation if the incumbent bank holds all the security and is not keen to release some.

This issue has been nullified over the past few years given the increase in the value of farming land.

Banks generally hold ample security.

One issue I have come across with RIC loans is the security it holds having road access.

This requirement rules out land-locked titles.

For those farming businesses that have multiple titles, a suitable arrangement can usually be agreed between the incumbent bank and RIC.

Another way around this is for RIC to take a deed of priority, that in essence means that RIC has a call on security the bank has a mortgage on, limited to the amount RIC is owed.

The only administrative issues this causes is the bank and RIC need to be in the loop if extra funding is sought from the existing agribusiness bank.

It is much easier and cleaner if RIC and the incumbent bank hold separate security if possible.

RIC loans have a finite life, and the expectation is that they are refinanced back to a mainstream bank after a period of time.

The terms and conditions are not onerous and there are no fees and charges.

These types of loans are a good option for farming businesses that for various reasons – often through no fault of their own – require a bit of breathing space.

My experience is that the existing bank is normally supportive of RIC applications.

These types of facilities are another tool in the toolbox of the forward-thinking farming business.