NSW Government Cooperative Loan Scheme Frequently Asked Questions
Frequently asked questions regarding the NSW Government Cooperative Loan Scheme, which facilitates loans to help NSW cooperatives expand or modernise their operations.
The NSW Government Cooperative Loan Scheme facilitates loans to help NSW cooperatives expand or modernise their operations.
Under the scheme, Australian-based cooperatives that have been in operation for three or more years may qualify for a loan.
The scheme aims to encourage investment in regional industries that deliver job security and economic growth in regional parts of the state.
Benefits of taking out a loan under the scheme may include:
- interest payments on a monthly or quarterly basis until the loan’s maturity date, at which point the principal is repaid
- potential tax deductions under section 120(1)(c) of the Income Tax Assessment Act 1936. Applicants should seek independent legal or tax advice to confirm their eligibility.
Loan are administered by the NSW Treasury Corporation on behalf of the state.
Successful applicants are required to pay interest (on either a monthly or quarterly basis) until the loan’s maturity date, at which point the principal is repaid.
Loan recipients may be eligible for tax deductions under section 120(1)(c) of the Income Tax Assessment Act 1936. Applicants should seek independent legal or tax advice to confirm their eligibility.
The scheme is available to Australian-based cooperatives that have been operating for at least three consecutive years that can demonstrate an ability to repay the loan and to obtain the required bank guarantee.
The loan must be used in line with the primary activity of the cooperative borrower, either to improve production facilities or to purchase capital assets to expand or modernise. The project must be based in regional NSW (excludes Greater Sydney, Newcastle and Wollongong Local Government Areas).
Examples include purchasing new machinery or equipment to improve current production processes; making improvements to production facilities such as water treatment or waste treatment plants; and purchasing new storage or processing facilities.
Applicants are required to demonstrate:
- they are based in Australia
- they have been operating for at least three consecutive years
- they are able to repay the loan
- they can provide a suitable bank guarantee
- the loan will be used in line with the cooperative’s primary activity.
Applicants are required to provide the following information as part of their application for a loan under the scheme:
- cooperative and requested loan details
- project details including location and expected outcomes
- a business plan including a financial analysis and expected returns on the investment, arrangements for delivering the proposed project, details as to how the loan will be repaid and a brief industry assessment.
- confirmation that the cooperative is able to provide a suitable bank guarantee issued by an Australian bank
- Certificate of Incorporation and confirmation that the cooperative is based in NSW
- Copy of the cooperative’s constitution or rules
- Confirmation of Independent legal advice obtained regarding eligibility for tax deductions
- audited financial reports for the previous three years.
A bank guarantee from an Australian bank with a credit rating of A or higher for the total loan amount plus six months interest. If the application is successful, the NSW Treasury Corporation will liaise with the cooperative regarding the respective bank guarantee arrangements before preparing a loan agreement on behalf of the state.
| Loan Type | Fixed or variable rate loans |
| Interest Rate | Available on application |
| Loan Term | Maximum 7 years* |
| Loan amount | Generally minimum $500,000 |
| Fees | Establishment fee $5,000 Prepayment fee $1,000 per prepayment Break costs may apply |
| Interest Payments and Loan Repayments | Interest payable on monthly/quarterly basis until loan maturity date Principal repayable on loan maturity date |
| Other requirements | Cooperatives must provide a bank guarantee from an Australian bank with a credit rating of A or higher for the full amount of the loan plus 6 months interest. |
*The maximum allowable tenor for Cooperative loans is determined by the credit rating of the bank supplying the bank guarantee:
| Credit Rating of Bank | Maximum Loan Term (Tenor) |
|---|---|
| AA- | 7 years |
| A+ | 7 years |
| A | 3 years |
The Department of Regional NSW assess the eligibility of each application before Investment NSW assess the applicant’s capacity to repay the loan.
NSW Treasury Corporation then prepare loan documentation on behalf of the state.
Payments are made to the NSW Treasury Corporation, acting on behalf of the state. Interest payments are made on a monthly or quarterly basis during the term of the loan, and the loan principal is repayable when the loan matures.
Prepayments may be made but a $1,000 fee is payable for each prepayment. Break costs may apply.
Contact the Department of Regional NSW on:
E: regionalnsw.business@regional.nsw.gov.au or
P: 1300 679 673 to discuss your eligibility for the scheme.
Applications can be made using the online form.