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 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 before you apply, or ring RIC on 1800 875 675 to talk through eligibility. Our RIC loans guide has more detail on every loan.

In the next lesson, we look at the different RIC loans and who each one is for.