The evolving landscape of farm lending in Ireland: Regulation, Risk and Resilience

Irish Examiner

26-05-2025

By Dave Sheane, Area Manager of FDC Financial Services Ltd, based in Midleton, Co Cork.
Dave Sheane, Area Manager of FDC Group's Midleton Office.
Access to financial advice is essential for Irish farmers, but securing funding has become increasingly difficult. At FDC Group, we're here to help you navigate the regulation and risk to create a resilient future.
The number of lenders supporting farms in Ireland has significantly reduced over the past decade due to a combination of market exits, consolidation and regulatory changes following the financial crisis and subsequent restructuring of the Irish banking system.
The exit of foreign owned institutions such as Ulster Bank, KBC, Danske Bank and Rabobank has left AIB, Bank of Ireland and Permanent TSB as the dominant players in support of Irish Farming particularly in the provision of long-term borrowing requirements.
Less competition has made accessing borrowing more difficult and has also led to higher interest rates compared to the Eurozone average. Increased capital requirements and tighter supervision from the Central Bank of Ireland and the European Central Bank have made the Irish market less attractive for some foreign banks/new entrants.
Positively, there has been an increase in 'Alternative lenders' to Irish farms including private lenders, credit unions, specialized agri-finance providers, asset finance & leasing companies and government-backed or EU-supported loan schemes. However, the majority of these do not offer long-term secured borrowing for capital projects and are typically more expensive than the traditional banks.
Here are some notable options:
Government & EU-Supported Schemes:
SBCI (Strategic Banking Corporation of Ireland) Microfinance Ireland.
Credit Unions:
Many credit unions across Ireland offer agricultural loans. 'Cultivate' is a loan product offered by a network of credit unions, specifically designed for farmers.
Asset Finance & Leasing Companies used to finance equipment, machinery or vehicles.
Private & Non-Bank Lenders:
Finance Ireland Agri offers HP & leasing for agricultural machinery and Milk Flex for Dairy Farmers Online lending platforms that connect investors directly with borrowers (Linked Finance / Flender / Rebuild Capital)
Loan Application Process:
The loan application landscape for Irish farmers has also evolved over the last decade.
Typically, it's dictated by loan size with smaller loans processed through an online processing center. Larger farm loan applications (typically over €500,000) continue to be assessed through a dedicated account manager with the assistance of the bank's specialist agri advisors.
The loan application process may take longer than it used to as the banks look to understand and assess an increasing number of factors and variables in their decision-making process.
The key underwriting criteria for farm lending are typically:
A detailed position statement for the farm:
Personal details of the applicants (DOB, Dependents, experience etc) Banking history Loan Structure (Personal borrowing or to a Limited Company) Current stock, current infrastructure, current labour, current off farm income etc.
A detailed business plan which clearly outlines the loan's purpose, expected outcomes and associated financial projections.
Explain how the loan funds will be applied.
Confirmation of any necessary planning permissions Financial Documentation:
Usually the last three years accounts current account and loan statements (usually the last 12 months) Tax clearance certificates Notice of Assessment or Form 11 for the last 2 years Repayment Capacity:
Historic analysis of historic farm performance projections for the next three years.
Debt Service Coverage Ratio: Measures surplus cash available to cover debt obligations using a stressed interest rate.
Equity Contribution:
Farmers to contribute 15–30% of the total investment (cash or existing assets). A factor that is often overlooked in terms of input is capital expenditure over the last five years from cashflow.
Security and Collateral for larger loans, lenders may require security interests in:
Land (valued at 130% of the loan amount) Buildings Personal guarantees Loan duration aligns with the asset's useful life:
Working capital: Up to 1 year Breeding stock: 5–7 years Farm development (e.g., buildings): Up to 15 years Land purchase: Up to 20 years
New risks being assessed:
Banks and providers of finance now need to comprehensively assess how regulation and compliance factors will influence the future repayment capacity of a farming enterprise. Typical area requiring assessment or comment:
EU Common Agricultural Policy (CAP) Reforms (Eco-schemes) Climate Action Plan (greenhouse gas reduction / improved slurry management, afforestation etc).
Water Framework Directive & Nitrates Directive Climate Risk and Resilience Sustainability Credentials (ESG Standards Carbon Footprinting and Emissions Reporting) Access to Green Finance Land Use and Biodiversity (Pressure to reduce livestock numbers and increase tree planting or set-aside land for biodiversity.
Reputational Risk (Lenders may avoid farms with a history of pollution, animal welfare issues, or poor environmental compliance Access to finance remains a problematic issue for Irish farms. Over the past decade in particular, the sources of finance and the application processes have undergone significant changes brought about and influenced by policy initiatives, market dynamics, evolving financial products and a more forensic approach to the assessment process by lenders.
The lack of banking competition has also contributed to Irish farmers paying higher interest rates compared to European counterparts.
With these changes, farmers often require the assistance of specialist financial advisors particularly with larger propositions.
We can help you here at FDC Group.
Contact us today here.
FDC Financial Services is regulated by the Central Bank of Ireland.