Wheels of rural property finance turning more slowly in COVID-19 landscape

Liz Wells, 06/05/2020

The 466ha North Avoca in the Maules Creek district near Narrabri is for sale for $2 million. Like nearly all farms in NSW, its winter crops are in ahead of or on schedule following excellent recent rain. Photo: Rural Property NSW

THE WHEELS of finance approval appear to be turning slower than normal as banks juggle tightened lending parameters, and the impacts of drought and COVID-19, against a bright outlook for cropping.

Findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry were handed down in February last year, and have tightened the parameters for lending in all sectors.

On top of that, drought has made assessing applications even more complicated, particularly in hard-hit areas in the northern half of New South Wales where some growers missed out on three winter crops in a row.

Those growers are now going full tilt at a big winter-crop planting as COVID-19 impacts the Australian and global economy.

“Finance is different to what it was two years ago, when you could make an offer and within three weeks, the bank could give you an indication,” Nutrien Harcourts Dubbo-based agent Mat Smith said.

“Now you could safely say it’s eight to 10 weeks away.”

Mr Smith’s observation has been echoed by a number of other Grain Central sources.

Delays inevitable

Grain Central asked ANZ, CBA, NAB, Rabobank and Westpac if approvals for rural property loans were taking longer in the current climate.

Their responses were mixed, and appear directly below, or at the end of this story.

“COVID-19 restrictions in the community have seen some delays in turnaround times across agricultural banking as an industry,” Rabobank said in its statement.

“This has been the result of a number of factors including restrictions on physical inspections of properties and security valuations, as well as delays to execution of documentation where hard copies and independent witnesses are required, and undertaking required regulatory client identification and verification which had previously been done face-to-face.

“In some cases, challenges of remote working with variable internet speeds may also be having an impact.

“In addition, it is a busy time in rural financing with the seasonal peak for funding of the upcoming winter-crop planting, extra financing requests due to drought recovery and also the lead up to end-of-financial-year planning and payments.

“There are also increased regulatory and compliance requirements for the industry.”

Rabobank said it was managing these challenges, and its primary focus remained servicing and helping its clients.

“There is a strong positive outlook for the season ahead, with significantly-improved seasonal conditions, solid local commodity prices in the majority of sectors as well as a low Australian dollar and interest rates.

“We expect farm profitability to remain positive across most sectors, including grain, this season and the agricultural land market to remain relatively well supported, despite the economic challenges relating to COVID-19.”

In its response, CBA said its speed of approval and funding turnaround depended on the quality of information it received from customers and their financial advisers and accountants.

“A common reason for delays is that we don’t always receive the requisite information we need, which is even more important where customers are coming out of drought where historical financials may appear weak,” CBA said.

Alternative credit

Sources have told Grain Central that bank customers are looking elsewhere for finance if their regular lender is unable to write new loans or extend existing ones.

“One of the things you are going to see in farming is alternative sources of credit from second-tier lenders,” Direct Agriculture executive director Philip Jarvis said.

Pastoral houses, resellers and brokers have all picked up extra business ahead of croppers tearing into this year’s winter-crop planting.

Mr Jarvis said anyone with a loan-to-value ratio (LVR) of roughly 70 per cent or more could be looking beyond their normal credit source for finance.

“The bank might have carried a farmer through three to five years of drought, and they’re saying they want some of their money back.”

That means farmers who want to borrow for three to 12 months to buy livestock, or invest in other “income-earning stuff” like irrigation infrastructure or silos, might be talking to parties other than their bank.

“It’s a fact that banks won’t extend their LVRs.”

Financial fallout

Mr Jarvis said COVID’s impact on financial markets would be seen as countries moved out of the medical emergency phase.

“Uncertainty is a global factor, and because of COVID, the value of certainty and cash in the bank is greater than it was before.

“On the other side of the equation, we go back to the fact that everyone’s got to eat.”

He said the allure of agriculture investments was stronger than ever.

Mr Jarvis referenced Macquarie Bank’s raising of around $600 million in capital in 2007 and 2008 for investment in agriculture during and after the Global Financial Crisis.

“That was…because financial investors were nervous about equity, bond and debt markets, and farmland — real estate with an operating entity sitting on top of it — is a real asset.”

He has predicted a similar phase could well occur post COVID.

“There will be more money coming into agriculture.

“We are on a post-COVID trajectory in Australia and New Zealand, and we appear to be edging out before the UK and the US.”

Bank responses


“Turnaround times remain generally business as usual, appreciating that customers impacted by COVID-19 events are our first priority. In addition, where conventional practice might be restricted, it can take time to develop an appropriate process and to work through any complexity. As always, we encourage customers with any concerns to contact us directly to help us ensure that their needs are being met.”

Head of agribusiness Mark Bennett


“We know that recent rainfall in many areas, coupled with strong commodity prices, low interest rates, and demand for our fresh Australian produce, means that many farmers are currently seeking loans for working capital – whether that be to plant winter crops or for restocking purposes – and we are committed to supporting these customers and prioritising their needs.”

More broadly across the business community, we’ve seen significant demand for working capital from businesses who have been impacted by the coronavirus pandemic, to help cover critical expenses like wages, supplier payments, and other overheads –and we’ve been working around the clock to help as many of our business customers as we can through these current challenges.”

— Head of regional and agribusiness banking Grant Cairns


The Commonwealth Bank is a strong and secure financial institution. The bank is well-capitalised and has more than adequate liquidity.

We have seen a significant increase in the volume of loan applications, across various sectors and industries.  

One way we’ve been supporting businesses is with funding through the Federal Government-backed SME Guarantee Scheme. Through this scheme, we are supporting both new and existing customers with loans up to $250,000 for a three year period, with all repayments deferred for the first six months. Over the past month, CBA has approved more than $400 million in SME Guarantee Loans to help Australian businesses. 

While we are doing everything we can to get funds quickly to our customers, the timing will vary for each customer, depending on their individual circumstances. For example, the timeframe from loan enquiry to approval to funding is dependent on a variety of factors including the structure and complexity of the business, the type of information we already have on that customer, the credit checks that needs to be undertaken, and the time customers take to return signed documentation to us.

Our speed of approval/funding turnaround is also dependent on the quality of information we receive from our customer and their financial advisors/accountants (a common reason for delays is that we don’t always receive the requisite information we need, which is even more important where customers are coming out of drought where historical financials may appear weak).

We know many agri customers have seen good rainfall and want to access capital immediately to rebuild following drought impacts, and we are committed to supporting our customers and Australia’s agricultural industry.

Current coronavirus restrictions have impacted millions of businesses and our priority right now is to support as many of our customers as we can through this challenging period.


“As Australia’s largest lender to agriculture, we remain open for business.

These are exceptionally challenging circumstances and we remain committed to supporting our customers. We have seen an increase in demand for finance through COVID-19 and our bankers are working hard to support customers who have accessed a range of support measures including interest deferrals and business support loans.

Our bankers are working with customers who are well prepared and have strong relationships with their banker to assist with providing finance. We encourage customers to speak to their local banker to work through their individual circumstances.”


“We’ve had a high demand for our relief packages for businesses and households, which has caused some delays in other parts of our operations. We’ve redirected employees to work through the applications, and have now processed the majority of requests for home loan repayment deferrals. We’ll be working hard to continue to process these applications as fast as possible, and to manage other services effectively, including prioritising purchase and sales activity. We apologise to customers who have experienced delays and thank them for their understanding as we work to help everyone as quickly as we can. Westpac has not changed its approach to the rural property market. We remain committed to rural and remote Australia. We are definitely still open for business.”



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