Agribusiness

If you’re struggling with agribusiness finances, you’re not alone.

Your bank has experienced agribusiness specialists ready to listen and talk about your options.

Be open and realistic when talking about your financial situation. Under the Banking Code of Practice, your bank must consider how they can help you with your financial difficulties.

Contact your bank as soon as you can. The sooner you do, the sooner they can find a solution that’s right for you.

Depending on your circumstances, there may be a number of ways for you to keep your repayments on track. These include:

• reviewing your budget and business plan
• reducing expenses
• restructuring your business
• seeking independent advice from an accountant or business adviser.

If you’re struggling to make your repayments, don’t panic. Stay in contact with your bank and other lenders you may have for things like equipment finance and livestock facilities. They will work with you to try and find options to help keep you in business. For example, they may be able to reduce your repayments or restructure your loan.

It’s a good idea to properly understand your business’s financial position and have this information ready when you speak to your bank.

Your bank may ask you for information so they can better understand your situation and consider the viability of your business – for example:

• business plan
• updated statement of position
• cashflow
• debtors and creditors
• tax

The bank may also ask for a valuation.

Your bank will work with you to consider solutions if your finances have been affected by:

• a natural disaster – such as drought or flooding
• a significant event.

If you run a farming operation and your land is affected by a natural disaster, tell your bank. They cannot charge default interest (or a fee in place of default interest) on your loan if the land is used for your farming operation.

Make sure to tell your bank about your personal or financial circumstances. They can work with you to find a suitable way for you to access and carry out your banking.

Options your bank may be able to offer to help your business through these difficult times include:

• Waiving fees and charges – including break costs on early redemption of farm management deposits.
• Consolidating debt to help make repayments more manageable.
• Offering additional temporary finance to help cover short-term cash flow shortages – such as overdraft.
• Reducing repayments or restructuring your loan.
• Deferring principal loan repayments.

Check these options against your budget to make sure they deliver the best outcome.

If you and your bank agree on a new arrangement for your loan, your bank will give you the changed arrangements in writing. This includes your new repayments and what happens at the end of the arrangement.

The bank will also let you know if the new arrangement affects your banking services or credit history.

If your bank cannot change your loan arrangement, they need to tell you why in writing.

You may also qualify for a concessional loan from the Regional Investment Corporation, grants or assistance offered by the Australian Government or state-based regional assistance grants.

Your bank may offer to defer your principal loan repayments. In most deferral arrangements, the interest and principal repayments you would have normally paid during the deferral period continue to accrue and are added to your loan.

You need to pay this once the deferral period ends. You may choose to extend the term of the loan or increase your repayments – or both.

When your bank sets up the deferral, they send you details of the arrangement in writing – including what happens when the deferral ends.

Your bank should contact you with options towards the end of the deferral period.

Before the deferral period ends, it’s a good idea to:

• review and update your business budget – the Australian Government’s business website has guides and tutorials to help you with your budget
• make sure you have sufficient funds to meet the loan repayments
• check your business credit card repayments are properly arranged
• check any direct debits to the account – they will start again.

If you have any questions about the arrangement or need more information, contact your bank.

Farm debt mediation (FDM) is a structured negotiation process between a farmer and their lender. FDM is available in some jurisdictions if you’re worried about meeting your loan repayments and you have already explored other options.

Depending on your circumstances, you or your bank can initiate FDM. A mediator works with both parties to reach an agreement on current financial arrangements, and the best way forward.

Generally, banks need to offer mediation before they start proceedings for debt recovery against farmers.

FDM legislation is in place in:

• New South Wales – see Rural Assistance Authority
• Victoria – see Victorian Small Business Commission
• South Australia – see South Australian Small Business Commissioner
• Queensland – see Queensland Rural and Industry Development Authority

Western Australia has a voluntary scheme – see Department of Primary Industries and Regional Development.

The Australian Government developed a national better practice guide to achieve more consistent and efficient outcomes for farmers and lenders going through the FDM process. The guide outlines:

• key principles to consider when dealing with FDM
• guidance on early engagement before mediation
• a range of activities that can be used by farmers and their lenders when financial difficulty arises.

The Rural Financial Counselling Service (RFCS) can support you through the FDM process.

Don’t be afraid to reach out and ask for help if you’re feeling stressed about your financial situation.

The first step is to contact your bank as soon as you can. Your bank is there to help you.

You can also talk to your trusted and qualified advisers – such as your accountant, lawyer, bank or business broker.

For small businesses and sole traders struggling with their business finances, call the Small Business Debt Helpline on 1800 413 828 for free, independent and confidential advice.

For farmers and rural and regional small businesses, call the Rural Financial Counselling Service on 1300 771 741 to get free, independent and confidential advice from rural financial counsellors.

There are also other services that offer free financial advice, legal advice and mental health support. See our list of support services.

If you’re not happy with your bank’s response, you can make a complaint to your bank.

In many cases, your complaint will be resolved between you and your bank with no further action needed.

If you’re not then satisfied, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is a free, independent complaints scheme. It provides a way of resolving disputes without having to go to court. The AFCA’s decision is binding on the bank.

If you need support to make a complaint, call the National Debt Helpline on 1800 007 007 to talk to a financial counsellor.

If you’re struggling with agribusiness finances, you’re not alone.

Your bank has experienced agribusiness specialists ready to listen and talk about your options.

Be open and realistic when talking about your financial situation. Under the Banking Code of Practice, your bank must consider how they can help you with your financial difficulties.

Contact your bank as soon as you can. The sooner you do, the sooner they can find a solution that’s right for you.

Make sure you open any mail you get from your bank. It will contain important information as to your options and who to contact.

Your bank will work with you to consider solutions if your finances have been affected by:

• a natural disaster – such as drought or flooding
• a significant event.

If you run a farming operation and your land is affected by a natural disaster, tell your bank. They cannot charge default interest (or a fee in place of default interest) on your loan if the land is used for your farming operation.

Make sure to tell your bank about your personal or financial circumstances. They can work with you to find a suitable way for you to access and carry out your banking.

Options your bank may be able to offer to help your business through these difficult times include:

• Waiving fees and charges – including break costs on early redemption of farm management deposits.
• Consolidating debt to help make repayments more manageable.
• Offering additional temporary finance to help cover short-term cash flow shortages – such as overdraft.
• Reducing repayments or restructuring your loan.
• Deferring principal loan repayments.

Check these options against your budget to make sure they deliver the best outcome.

If you and your bank agree on a new arrangement for your loan, your bank will give you the changed arrangements in writing. This includes your new repayments and what happens at the end of the arrangement.

The bank will also let you know if the new arrangement affects your banking services or credit history.

If your bank cannot change your loan arrangement, they need to tell you why in writing.

A default notice is a letter from your bank warning you that your account is in default because you’re behind with your repayments.

If you get a default notice, read it carefully. It will outline steps you can take, timing, and other information that might affect your financial position.

When you get a default notice, you have a limited period of time to ask your bank for help and come to an arrangement. Usually, this is 30 days. For equipment finance, 14 days. If you don’t come to an arrangement, your bank may start legal action.

If you’re in default your bank may invite you to take part in farm debt mediation. Generally, banks need to offer mediation before they start debt recovery against farmers.

Farm debt mediation (FDM) is a structured negotiation process between a farmer and their lender. FDM is available in some jurisdictions if you’re worried about meeting your loan repayments and you have already explored other options.

Depending on your circumstances, you or your bank can initiate FDM. A mediator works with both parties to reach an agreement on current financial arrangements, and the best way forward.

Generally, banks need to offer mediation before they start proceedings for debt recovery against farmers.

FDM legislation is in place in:

• New South Wales – see Rural Assistance Authority
• Victoria – see Victorian Small Business Commission
• South Australia – see South Australian Small Business Commissioner
• Queensland – see Queensland Rural and Industry Development Authority

Western Australia has a voluntary scheme – see Department of Primary Industries and Regional Development.

The Australian Government developed a national better practice guide to achieve more consistent and efficient outcomes for farmers and lenders going through the FDM process. The guide outlines:

• key principles to consider when dealing with FDM
• guidance on early engagement before mediation
• a range of activities that can be used by farmers and their lenders when financial difficulty arises.

The Rural Financial Counselling Service (RFCS) can support you through the FDM process.

It’s essential to stay in touch with your bank. Your bank always looks for ways to help you.

If they cannot do that, and you cannot meet the conditions of a default notice, your bank may lodge a legal document called a Statement of Claim.

A Statement of Claim is an application made to the court that sets out how much your bank claims you owe them and why they’re making the claim.

If you receive a Statement of Claim, seek legal advice as soon as possible – within 4 weeks at the latest. If you do nothing, the court may enter a judgment against you, and you may lose the opportunity to lodge a defence, if you have one.

Legal costs relating to the Statement of Claim are added to your loan balance. The sooner you contact your bank, the better. This helps to keep down the legal costs added to your loan.

You can still talk to your bank and try to come to an arrangement about your loan even after receiving a Statement of Claim.

If you need help, there are services that offer free financial advice, legal advice and mental health support. See our list of support services.

It’s in your best interests to appoint your own trusted adviser, and then develop a plan to discuss with your bank.

In some cases, your bank may appoint its own external adviser. For example, if there’s an immediate risk to perishable stock. The bank must act fairly and sensitively to manage any potential conflicts of interest.

If you cannot resolve the financial difficulties faced by your business, your bank should give you reasonable time to sell assets and wind up your business. The bank will work with you to do this.

It may be in your best financial interests to sell your assets – especially if you cannot make repayments and are losing equity in those assets in your farming or business operations.

Delaying decisions about selling assets or winding up your business may increase your costs. Your assets may reduce in value compared to selling earlier, which may mean you lose money.

The best thing you can do is talk to your bank. They will help you consider solutions that are right for you.

If your loan is subject to a guarantee, your bank will notify your guarantor about your declining financial position. The bank will give you:

• A copy of any formal demand or default notice given to you by the bank.
• A written notice – if you told the bank about financial difficulty that resulted in a change to your loan.
• A written notice – if you are in continuing default for more than 2 months after you got the default notice referred to above.

If you default, you may have to sell assets or property to pay back the loan. If the sale price does not pay back the full loan amount, the bank may enforce the guarantee. This means they can recover the difference from the guarantor.

You should seek legal advice  about a formal demand or notice for payment to a guarantor. Guarantors can also contact the bank if they’re experiencing financial difficulty.

Help is available if you cannot afford a lawyer.

Legal Aid provides free legal advice and services to disadvantaged people and legal representation for eligible clients.

Community Legal Centres provide free and accessible legal services – especially to people experiencing financial hardship, discrimination, or domestic or family violence.

The law society in your state or territory can give you names of lawyers who may be able to help with your case. The lawyer will explain how much their services are likely to cost. They may take your case ‘pro bono’, which means you don’t have to pay their fees.

To contact Legal Aid, a Community Legal Centre near you, or the law society in your state, see legal support.

If you’re in default your credit score may be affected. A poor credit score can affect your ability to get finance.

Avoid companies offering to repair your credit score for a fee. The Moneysmart website explains how credit reporting and credit scores work, what you can fix and how to do it for free.

Don’t be afraid to reach out and ask for help if you’re feeling stressed about your financial situation.

The first step is to contact your bank as soon as you can. Your bank is there to help you.

You can also talk to your trusted and qualified advisers – such as your accountant, lawyer, bank or business broker.

For small businesses and sole traders struggling with their business finances, call the Small Business Debt Helpline on 1800 413 828 for free, independent and confidential advice.

For farmers and rural and regional small businesses, call the Rural Financial Counselling Service on 1300 771 741 to get free, independent and confidential advice from rural financial counsellors.

There are also other services that offer free financial advice, legal advice and mental health support. See our list of support services.

If you’re not happy with your bank’s response, you can make a complaint to your bank.

In many cases, your complaint will be resolved between you and your bank with no further action needed.

If you’re not then satisfied, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is a free, independent complaints scheme. It provides a way of resolving disputes without having to go to court. The AFCA’s decision is binding on the bank.

If you need support to make a complaint, call the National Debt Helpline on 1800 007 007 to talk to a financial counsellor.

AFCA can consider complaints about a small business or agribusiness credit facility under $5 million.

If your business finances are back on track, it’s essential to look at what else has changed. You may need to adjust your operational and financial habits.

You may want to seek independent advice from an accountant or rural business advisor about restructuring your operation.

You may also qualify for a loan from the Regional Investment Corporation or state-based regional assistance grants or loans.

Getting through each day may seem a challenge after a business loss. But as your finances start to improve, things will get better.

There are steps you can take to help get your agribusiness or farm finances and wellbeing back on track.

Assess your situation

Start by working out where you are right now, and then think about where you want to be in the future.

Define your short and long-term goals. Factor in financial and other risks that may affect you and your potential returns. This will give you a better idea of the viability of your operation. It will also help you build business resilience so you’re better prepared for unexpected events and downturns in the future.

Set realistic goals

While you want to get your finances back on track as soon as possible, you need to be patient with financial realities, especially if you’ve suffered a major financial loss.

If your expectations are unrealistic, you may get discouraged. Instead, set a realistic timeframe and work towards that as a goal.

For example, you may need to improve your credit score if you want a loan to refinance your operation.

Seek guidance

Organise regular planning and strategy sessions with professional business and rural advisors.

They can help you develop a comprehensive business management plan for the future.

You can also talk to your bank about how they can help get your business back on track. Your bank can give you practical tools or introduce you to sponsored training opportunities to help you understand business management and risk.

There are plenty of free online resources about business finance and managing debt.

Don’t be afraid to reach out and ask for help if you’re feeling stressed about your financial situation.

The first step is to contact your bank as soon as you can. Your bank is there to help you.

You can also talk to your trusted and qualified advisers – such as your accountant, lawyer, bank or business broker.

For small businesses and sole traders struggling with their business finances, call the Small Business Debt Helpline on 1800 413 828 for free, independent and confidential advice.

For farmers and rural and regional small businesses, call the Rural Financial Counselling Service on 1300 771 741 to get free, independent and confidential advice from rural financial counsellors.

There are also other services that offer free financial advice, legal advice and mental health support. See our list of support services.

If you’re not happy with your bank’s response, you can make a complaint to your bank.

In many cases, your complaint will be resolved between you and your bank with no further action needed.

If you’re not then satisfied, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is a free, independent complaints scheme. It provides a way of resolving disputes without having to go to court. The AFCA’s decision is binding on the bank.

If you need support to make a complaint, call the National Debt Helpline on 1800 007 007 to talk to a financial counsellor.

AFCA can consider complaints about a small business or agribusiness credit facility under $5 million.

There may a number of reasons why you choose to close your business.

Contact your trusted and qualified advisers – such as your accountant, lawyer, bank or business broker. They can help determine the best next steps for you and your finances. They can work through what you need to do, and explain how they can support you.

There may be multiple options available to you – including selling or merging your business, restructuring or succession. Talk through the options with your advisers to help you make the right decision for you.

Making a plan to close your business can help you consider your circumstances and options. It can also maximise the value remaining in your business.

Talk with your advisers about your plan. You can also visit CPA Australia, which has tools and a guide for exiting your business.

If you’re recovering from closing your business, support is available to help you transition to employment. For example, Workforce Australia is a government program to help people get back into work.

Take care of yourself and reach out for help – you don’t need to go through this alone.

It’s in your best interests to appoint your own trusted adviser, and then develop a plan to discuss with your bank.

In some cases, your bank may appoint its own external adviser. For example, if there’s an immediate risk to perishable stock. The bank must act fairly and sensitively to manage any potential conflicts of interest.

If your loan is subject to a guarantee, your bank will notify your guarantor about your declining financial position. The bank will give you:

• A copy of any formal demand or default notice given to you by the bank.
• A written notice – if you told the bank about financial difficulty that resulted in a change to your loan.
• A written notice – if you are in continuing default for more than 2 months after you got the default notice referred to above.

If you default, you may have to sell assets or property to pay back the loan. If the sale price does not pay back the full loan amount, the bank may enforce the guarantee. This means they can recover the difference from the guarantor.

You should seek legal advice  about a formal demand or notice for payment to a guarantor. Guarantors can also contact the bank if they’re experiencing financial difficulty.

Don’t be afraid to reach out and ask for help if you’re feeling stressed about your financial situation.

For small businesses and sole traders struggling with their business finances, call the Small Business Debt Helpline on 1800 413 828 for free, independent and confidential advice.

For farmers and rural and regional small businesses, call the Rural Financial Counselling Service on 1300 771 741 to get free, independent and confidential advice from rural financial counsellors.

There are also other services that offer free financial advice, legal advice and mental health support. See our list of support services.

Don’t be afraid to reach out and ask for help if you’re feeling stressed about your financial situation.

For small businesses and sole traders struggling with their business finances, call the Small Business Debt Helpline on 1800 413 828 for free, independent and confidential advice.

For farmers and rural and regional small businesses, call the Rural Financial Counselling Service on 1300 771 741 to get free, independent and confidential advice from rural financial counsellors.

There are also other services that offer free financial advice, legal advice and mental health support. See our list of support services.

If you’re not happy with your bank’s response, you can make a complaint to your bank.

In many cases, your complaint will be resolved between you and your bank with no further action needed.

If you’re not then satisfied, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is a free, independent complaints scheme. It provides a way of resolving disputes without having to go to court. The AFCA’s decision is binding on the bank.

If you need support to make a complaint, call the National Debt Helpline on 1800 007 007 to talk to a financial counsellor.

AFCA can consider complaints about a small business or agribusiness credit facility under $5 million.