Best Practice Delivery of Financial Counselling RFC

Best Practice Delivery of Financial Counselling RFC

“A mature farming couple made an appointment to meet a Rural Financial Counsellor [RFC] from the Rural Financial Counselling Service NSW – Central Region for the first time in mid-2019. These were very capable people having already applied for Farm Household Allowance [FHA] online themselves, as well as completing applications for NSW State Government drought assistance online themselves.

The clients came to the meeting well-prepared, bringing their recent financial statements, statement of position and a cash flow budget. It was evident to the RFC they were in a strong financial position with 97% equity, although there had been an occasional loss showing in the financial statements. They had a relatively small term loan of $64,000 and overdraft of $8,000 (limit of $20,000) with one of the major banks, where the family had banked for three generations. 

After two years of severe drought, working capital was depleted due to reduced income from crop and livestock sales coupled with the increased cost of purchasing grain for the first time in 37 years. They had applied to their existing bank for an additional $64,000 carry-on finance which the bank declined, much to the clients’ frustration. Not knowing where to turn next, they made the appointment to meet with the RFC.

The clients had heard of the Regional Investment Corporation [RIC] and wondered if this could provide a solution to their needs. The RFC agreed that the clients should apply to RIC for a loan to match their existing term loan debt, as this would provide them with the additional working capital they need at an interest rate which would improve their business viability over the medium to longer term. The clients subsequently provided the RFC with all the information required for the RIC application and this was compiled by the RFC and submitted to RIC on behalf of the client.

The RFC pointed out to the clients that the RIC funding would likely take several months to become available so they should look at other options in the short-term. The clients had maintained a small personal account with one of the other major banks, so the RFC suggested they look to refinance their existing debt to the same bank, to minimize the inconvenience of changing banks.

The RFC referred the clients to the agribusiness manager for their area who quickly and efficiently took on their existing debt and provided them with the additional working capital required until RIC funds became available.    

RIC funds became available in Dec 2019, upon which all goals for this client had been achieved so the client was closed by the RFC.”

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