Farmers should be aware of what to do when they have had requests for credit refused or reduced, or are seeking to restructure existing credit facilities.

In February, new legislation was signed that strengthens Ireland’s framework for reviewing bank credit decisions affecting farmers.

It establishes the Credit Review Service as an independent statutory body.

The role of the Credit Reviewer was set up in 2010 by the then finance minister to assist viable SMEs and farm businesses in obtaining access to credit.

It works to provide a "simple and effective" credit review and appeals process for business owners who have been refused credit from participating banks. 

It also operates a helpline for farm and business borrowers having difficulty getting credit.

The Credit Review Act establishes 'An tSeirbhís um Athbhreithniú Creidmheasa' (the Credit Review Service) as an independent statutory body offering an informal appeals mechanism for SMEs and farmers denied bank credit.

The act also provides for the ability to extend the service to regulated non-bank lenders in the future as the SME credit market evolves.

Farmers and credit appeals

Credit Review said that historically, the average size of applications from farmers to Credit Review is circa €170,000, although the service can look at facilities from €1,000 up to €3 million. 

"Since establishment of the service, 243 farm cases have formally entered our review process," Credit Review said.

"198 cases were concluded and Credit Review supported the farm borrower in 115 cases with 83 securing a credit approval from their bank. 

"A further nine cases reached agreement with their bank during the process and were also approved credit. In these cases, banks agreed to provide credit of €41.9 million."

Head of Credit Review, Catherine Collins said in most cases reviewed, the borrower can be supported by "recommending a credit solution that works for both the business and the bank".

“Most importantly, in two-thirds of the cases we support, the businesses are approved a lending or credit solution by their bank," Collins said.

In cases where the reviewer is unable to recommend that the bank advance credit at the time, Credit Review "will suggest a roadmap to make future bank applications more likely to succeed and may signpost farm businesses towards other government supports that can help them to grow and develop their business".

Credit applications

Credit Review also has a number of tips for potential borrowers.

These include to check your credit record.

"One of the most important considerations for a bank can be your credit history – a poor credit record can lead to a rapid refusal," it explained.

"In Ireland, banks are obliged to check the Central Credit Register (CCR), so you should check your credit history before you apply.

"It can help you spot any missed payments or mistakes in your credit report. The CCR website provides guidance on how to do so, and what to do if there are errors on your report."

Farmers should make a formal application, not an enquiry.

"A formal application will be considered by the bank’s credit department," Credit Review said.

"Applications can be made in person at a branch, over the phone or online.

Farmers should provide all the information requested and check that the bank has received it.

"The bank typically has 15 days to respond to an application, but the clock is switched off if the bank is awaiting additional information from you."

Always provide clear, concise and relevant information about the farm business, with realistic projections showing an ability to repay.

"If the bank is not clear about what you intend to do and how you intend to repay the debt, you will likely get a negative response," Credit Review said.