# RIC loans step by step A free short course from Farm CFO by Clunes Rural. 5 lessons, about 25 minutes in all. No sign-up. Understand who the Regional Investment Corporation is, which loan fits, the basic tests, the documents and how an application runs. Who it's for: Farm families thinking about a RIC loan who want to know what's involved before they start the form. You'll be able to: - Explain how a RIC loan sits beside your bank loan - Pick the RIC loan that matches your situation - Check the basic eligibility tests - Gather the documents and plan the timing ## Lesson 1: Who the Regional Investment Corporation is The Regional Investment Corporation, usually called RIC, is an Australian Government lender. It offers concessional loans to eligible farm businesses and some farm-related small businesses. Concessional means the loan is on better terms than a normal commercial loan. RIC is not a replacement for your bank. It lends alongside your bank, and that shapes everything about how a RIC loan works. ## RIC needs your bank too To get most RIC farm loans, your business must already have commercial debt. Commercial debt is a loan on normal commercial terms, usually from a bank, with formal security and a signed loan agreement. RIC's [commercial debt page](https://www.ric.gov.au/before-apply/explainers/what-commercial-debt) says some debts don't count, including home loans, personal loans, family loans, equipment finance, working capital funding and other government scheme loans. Your bank also has to support your RIC application. So the first conversation is usually with your bank manager, not with RIC. ## The 50% rules RIC sets two limits: - **At least 50% of your total debt must still be commercial debt** after you take the RIC loan. - **Your RIC loan can't be more than your commercial debt.** In practice, if you use the RIC loan to refinance (pay out some existing debt), you can move up to half of it to RIC. If you use the RIC loan for new borrowing, it can be as big as your commercial debt, within the loan's own maximum. ## Why farmers use RIC A RIC loan can lower your interest cost and give you breathing space, because RIC's main loans start with 5 years interest only. Interest only means you pay just the interest, so the amount you owe doesn't go down in that time. The trade-off is a jump in repayments when principal starts in year 6. Plan for that from day one. ## Where to check RIC's rules change from time to time. Check [ric.gov.au](https://www.ric.gov.au/loans) before you apply, or ring RIC on 1800 875 675 to talk through eligibility. Our [RIC loans guide](https://farmcfo.com.au/guides/ric-loans-explained) has more detail on every loan. In the next lesson, we look at the different RIC loans and who each one is for. ### Worked example **An invented beef business.** The figures are illustrative. It owes its bank $900,000 on a term loan secured over the farm. That's its commercial debt. - **Using RIC to refinance:** it could move up to $450,000 to RIC. Total debt stays at $900,000: $450,000 commercial and $450,000 RIC. Commercial debt is 50% of the total, so the rule is met. - **Using RIC for new borrowing:** the RIC loan could be up to $900,000. Total debt becomes $1,800,000, and commercial debt is still 50%. Either way, what RIC actually lends depends on its assessment of the business, not just these limits. ### Check your understanding 1. What is RIC? Answer: An Australian Government lender that lends alongside your bank. RIC is a government lender offering concessional loans. It works next to your commercial lender, not instead of it. 2. After a RIC loan, what share of your total debt must still be commercial debt? Answer: At least 50%. RIC requires at least half your total debt to remain commercial debt. 3. Which of these does RIC count as commercial debt? Answer: A bank term loan with formal security over the farm. RIC's commercial debt page lists home loans and equipment finance among the debts that don't count. A secured bank term loan does. ## Lesson 2: The RIC loan types RIC offers several loans. Each one has its own guidelines, so the first job is to find the one that matches why you need the money. ## The three main farm loans These three each lend up to $2 million over 10 years, with the first 5 years interest only, then principal and interest. - **[Drought Loan](https://www.ric.gov.au/drought):** to prepare for, manage through and recover from drought. RIC lists uses such as water efficiency, building feed reserves, paying bills, buying fodder, carting water, and restocking or replanting when the season allows. It can also refinance some existing debt. You need a drought management plan. - **[AgriStarter Loan](https://www.ric.gov.au/agristarter):** for people buying, setting up or developing their first farm business (First Farmer), and for families going through succession (handing the farm to the next generation). - **[Farm Investment Loan](https://www.ric.gov.au/farm-investment):** for farm businesses recovering from severe business disruption outside their control, and preparing for future disruption. RIC looks at whether the impact lasts around two years. ## The smaller loans - **[AgBiz Drought Loan](https://www.ric.gov.au/agbiz-drought):** up to $500,000 for small businesses that aren't farms but supply goods or services to farms in drought-affected areas, such as a stock carrier. The business must have fewer than 20 employees, not counting casuals. - **[Drought Hardship Loan](https://www.ric.gov.au/drought-hardship):** up to $250,000 over 5 years for running costs in a long drought. Your farm must have been in drought for at least 24 months, and be expected to be hit for at least the next 12. There's nothing to pay for the first 2 years, but interest builds up and is repaid from year 3. It can't be used to refinance, and you need a drought management plan. RIC also has a Marine Recovery Loan for some South Australian fishing and aquaculture businesses, which few farm readers will need. ## The interest rate All RIC loans use a variable rate set by the Australian Government. RIC announced the rate would be [5.71% from 1 August 2026](https://www.ric.gov.au/news/ric-variable-interest-rate-change-1-august-2026), up from 5.18%. It's reviewed every six months, so check RIC's site for the current rate. Some RIC pages may still show an older rate. ## Which one fits? Ask yourself why you need the money. Drought? Look at the Drought Loan, or the Drought Hardship Loan if it's been dry for two years or more. First farm or succession? AgriStarter. A big hit from something like a disaster or a market closing? Farm Investment. If you're not sure, ring RIC on 1800 875 675. It would rather talk it through than have you guess. ### Worked example **An invented cattle family.** The figures are illustrative, and the rate is RIC's announced 5.71% from 1 August 2026, which can change. They borrow $300,000 as a Drought Loan and repay monthly. - **Interest a year in years 1 to 5:** $300,000 × 5.71% = $17,130. - **Each month:** $17,130 ÷ 12 = $1,427.50. - **Interest over the five years:** $17,130 × 5 = $85,650. After five years they still owe the full $300,000, because interest-only payments don't reduce the loan. From year 6, principal is added and the repayments go up. RIC sets the exact figure in the loan documents, so ask for the repayment schedule before signing. Try the interest rate change calculator: https://farmcfo.com.au/tools/interest-rate-change ### Check your understanding 1. Which RIC loan is meant for a first farm or a family succession? Answer: AgriStarter Loan. AgriStarter has two types, First Farmer and Succession, for exactly those situations. 2. What does interest only mean? Answer: You pay just the interest, so the loan balance doesn't go down. With interest only, each payment covers the interest. The amount you owe stays the same until principal repayments start. 3. How long must a farm have been in drought for the Drought Hardship Loan? Answer: At least 24 months. RIC says the business must have been in drought for at least 24 months, and be expected to be affected for at least the next 12. ## Lesson 3: Eligibility basics Every RIC loan has its own guidelines, and RIC makes the final call. But the main farm loans share a set of basic tests. Run through these before you spend hours on the form. This is general information, not a decision on your case. ## You and your farm For the [Drought Loan](https://www.ric.gov.au/drought), RIC says: - You're an Australian citizen or permanent resident. - You put in, or plan to put in, **at least 75% of your labour** to the farm business in normal times. - You earn, or plan to earn, **at least 50% of your income** from the farm business in normal times. - You own or lease land used for farming, which can include agistment. The [AgriStarter Loan](https://www.ric.gov.au/agristarter) uses a lower labour test: at least 50% of your labour, and at least 50% of your income. ## Your business The business must: - **Be in financial need.** For the Drought Loan, that means something outside your control has cut your profit, cashflow or financial resilience. - **Be viable.** It can repay the loan and stay financially sound in the long term. - **Have commercial debt** already. AgriStarter also accepts an agreement to take on commercial debt within a reasonable time. - **Have an ABN and be registered for GST.** - **Be a sole trader, trust, partnership or private company**, and not bankrupt or under external administration. ## What else you need You also need security for the loan (property RIC can sell if the loan isn't repaid), and your commercial lender's support. For the Drought Loan, you need a drought management plan, which we cover in the next lesson. ## The tests people trip on From our time in banking, three things catch people out: 1. **Viability.** RIC wants to see the business can repay in a normal year. A clear cashflow matters more than a long story. 2. **Bank support.** If your bank isn't on board, the application stalls. Talk to them first. 3. **Off-farm income.** If off-farm work has grown, check the income test carefully. If you're unsure about any test, ring RIC on 1800 875 675 before you start. If you're in financial hardship, the [Rural Financial Counselling Service](https://www.agriculture.gov.au/agriculture-land/farm-food-drought/drought/rural-financial-counselling-service) can help with applications for free on 1300 771 741. ### Worked example **An invented couple running sheep.** The figures are illustrative. In a normal year, one partner works on the farm full time. The other spends about 80% of their working time on the farm and 20% in a part-time job in town. Their income in a normal year: | Source | Amount | |---|---:| | Farm business | $120,000 | | Off-farm job | $80,000 | | **Total** | **$200,000** | Farm share: $120,000 ÷ $200,000 = 60%, which is above the 50% income test. The full-time partner clearly meets the 75% labour test. These are only the basic tests. RIC still assesses financial need, viability and security. ### Check your understanding 1. For the Drought Loan, what share of labour must go into the farm business? Answer: At least 75%. RIC's Drought Loan page says you contribute or plan to contribute at least 75% of your labour to the farm business in normal times. 2. What does 'viable' mean in RIC's tests? Answer: The business can repay the loan and stay financially sound in the long term. Viability is about the business's long-term ability to repay. A clear normal-year cashflow helps show it. 3. Who should you usually talk to before applying to RIC? Answer: Your commercial lender, because RIC needs its support. RIC requires your commercial lender's support, so getting the bank on board early avoids delays. ## Lesson 4: The documents RIC asks for Most RIC applications that stall are missing something. Gather the documents before you start the online form, and the rest goes much more smoothly. This list follows [RIC's April 2026 loan document checklist](https://www.ric.gov.au/sites/default/files/documents/RIC-Loan-Document-Checklist-0426.pdf). Check the latest version before you apply. ## Needed for the first assessment 1. **Financial statements** for at least the last three years, for every entity linked to the application. They must be prepared by your accountant and include profit and loss statements, balance sheets and depreciation schedules. The latest finalised set must be no more than 18 months old when RIC assesses the loan. 2. **A statement of position:** every asset and liability for each person and entity in the business. In plain words, what you own and what you owe. 3. **A "year in, year out" cashflow budget:** a detailed cashflow for a normal year at full production, for a year you nominate. It shows RIC what the business looks like when things are working, not in the middle of a drought. ## Often asked for during assessment RIC's lending specialist may also ask for ATO account statements, your last three tax returns in full, 12 months of personal and business bank statements, 12 months of loan statements, your bank's latest letter of offer, any trust deed, rates notices and water licences, and certified ID. ## For particular loans - **Drought Loan:** a drought management plan. [RIC says](https://www.ric.gov.au/explainers/what-drought-management-plan) it sets out how you'll prepare for, manage through and recover from drought, and the activities the loan will fund. If you're refinancing, explain how the interest savings help you prepare for the next drought. Examples RIC gives include water infrastructure, stock reduction or agistment, and early weaning. You can use your own plan, the template in the form, or RIC's separate template. - **AgriStarter succession:** a succession plan prepared by a professional. - **Business plan:** RIC's checklist also lists a detailed business plan that lines up with your year in, year out figures. ## Our templates We have a [year in, year out cashflow spreadsheet](https://farmcfo.com.au/downloads/farm-cfo-ric-yiyo-cashflow.xlsx), a [RIC application pack](https://farmcfo.com.au/downloads/farm-cfo-ric-application-pack.docx) and a [drought management plan template](https://farmcfo.com.au/downloads/farm-cfo-drought-management-plan.docx). They're free. Make sure your figures match your accountant's statements, because a mismatch invites questions. ### Worked example **An invented cattle business.** The figures are illustrative. Its year in, year out cashflow, for a normal year at full production: | Item | Amount | |---|---:| | Cattle sales and other receipts | $640,000 | | Less operating costs | -$410,000 | | Less bank interest | -$68,000 | | Less RIC interest on $300,000 | -$17,130 | | Less family drawings | -$80,000 | | **Surplus** | **$64,870** | The check: $640,000 - $410,000 - $68,000 - $17,130 - $80,000 = $64,870. That surplus is what shows RIC the business can carry the loan in a normal year. The figures should tie back to the accountant's statements. Download the year in, year out cashflow: https://farmcfo.com.au/downloads/farm-cfo-ric-yiyo-cashflow.xlsx ### Check your understanding 1. How many years of financial statements does RIC's checklist ask for? Answer: At least the last three years. The checklist asks for at least three years of accountant-prepared statements for every entity linked to the application. 2. What is a 'year in, year out' cashflow? Answer: A cashflow for a normal year at full production. It shows how the business performs in a normal year, which is what RIC uses to judge whether the loan can be repaid. 3. Which loan needs a drought management plan? Answer: The Drought Loan. RIC requires a drought management plan with every Drought Loan application. ## Lesson 5: The process and the timing A RIC application is not hard, but it has a lot of moving parts. Knowing the order helps you plan, especially if you need the money by a certain date. ## The steps 1. **Check you're eligible.** Read the guidelines for your loan on [RIC's site](https://www.ric.gov.au/loans) and use its eligibility tools. 2. **Tell your bank.** [RIC's how to apply page](https://www.ric.gov.au/how-apply) lists telling your commercial lender as one of the checks before you start. 3. **Gather the documents.** Use the list in the last lesson. This is usually the slowest part, because it depends on your accountant. 4. **Start the online application.** Once you start, you have 45 days to submit before the draft expires. RIC sends reminders along the way. So don't start the form until your documents are nearly ready. 5. **Assessment.** RIC can only start assessing once everything is in. Its lending specialists check eligibility, look at the finances and may ask for more documents. 6. **Decision.** RIC approves or declines the loan. 7. **Loan documents and settlement.** If it's approved, RIC prepares the loan documents and arranges settlement. Your bank and the lawyers are involved here, especially around security. ## How long does it take? RIC doesn't promise a fixed time. Its [loan pathway page](https://www.ric.gov.au/ric-loan-pathway) says timing depends on demand and on each applicant's situation. It gives examples. One AgriStarter loan was approved within RIC's target average of 50 days. One Drought Loan was submitted and settled within a couple of months. One Farm Investment Loan took around four months, because of missing information and changes to security. ## What slows things down - **Missing information** in the first submission. - **Security.** If your bank and RIC want security over the same land, a deed of priority (an agreement about who gets paid first) may be needed. That takes time between lawyers. - **Complex structures**, such as trusts and several entities. - **A cashflow that doesn't add up**, or doesn't match the accountant's figures. ## Plan backwards If you need the money for a feed bill or a settlement date, count backwards. Allow time for your accountant, the 45-day draft window, assessment and settlement. Starting early costs nothing. Starting late can cost a lot. We don't arrange loans and can't promise any outcome. What we can do is build the cashflow, statement of position and plans so your application goes in complete. ### Worked example **An invented timeline.** The dates are made up for the example. A family starts its online application on 1 March. With 45 days to submit, the draft expires on 15 April. They submit on 10 April, with every document attached. If assessment then took 50 days, in line with the target average RIC mentions in one example, a decision would come around 30 May. Settlement comes after that, once loan documents and security are sorted. If they need the money by 1 July, there's a month of buffer. If the accountant had been three weeks late with the statements, that buffer would be gone. That's why the documents come first. ### Check your understanding 1. How long do you have to submit a RIC online application after you start it? Answer: 45 days. RIC's how to apply page says you have 45 days to submit before your draft expires. 2. When does RIC start assessing an application? Answer: Once all the required information is submitted. RIC says it needs all required information before it can start assessing. 3. What is a deed of priority? Answer: An agreement between lenders about who gets paid first from shared security. If the bank and RIC both want security over the same land, a deed of priority sets out who ranks first. It can take time to arrange. ## Next step Talk to us about a RIC application: https://farmcfo.com.au/contact?service=project ## Sources - [Regional Investment Corporation, Our loans](https://www.ric.gov.au/loans) - [Regional Investment Corporation, Drought Loan](https://www.ric.gov.au/drought) - [Regional Investment Corporation, AgriStarter Loan](https://www.ric.gov.au/agristarter) - [Regional Investment Corporation, Farm Investment Loan](https://www.ric.gov.au/farm-investment) - [Regional Investment Corporation, AgBiz Drought Loan](https://www.ric.gov.au/agbiz-drought) - [Regional Investment Corporation, Drought Hardship Loan](https://www.ric.gov.au/drought-hardship) - [Regional Investment Corporation, RIC variable interest rate change from 1 August 2026](https://www.ric.gov.au/news/ric-variable-interest-rate-change-1-august-2026) - [Regional Investment Corporation, What is commercial debt?](https://www.ric.gov.au/before-apply/explainers/what-commercial-debt) - [Regional Investment Corporation, Loan document checklist (April 2026)](https://www.ric.gov.au/sites/default/files/documents/RIC-Loan-Document-Checklist-0426.pdf) - [Regional Investment Corporation, What is a drought management plan?](https://www.ric.gov.au/explainers/what-drought-management-plan) - [Regional Investment Corporation, How to apply](https://www.ric.gov.au/how-apply) - [Regional Investment Corporation, RIC loan pathway](https://www.ric.gov.au/ric-loan-pathway) - [Regional Investment Corporation, Contact us](https://www.ric.gov.au/contact-us) - [DAFF, Rural Financial Counselling Service](https://www.agriculture.gov.au/agriculture-land/farm-food-drought/drought/rural-financial-counselling-service) General information only, not financial, tax, legal or credit advice. These courses are not nationally accredited training.