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Less than nine months after the pilot for the discount initiative began, the major bank has confirmed that it will be available nationally.
During November last year, the Commonwealth Bank (CBA) announced that it would be offering a discounted loan as a means to support its agribusiness customers investing in “environmental initiatives on their properties”.
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The eligibility criteria for this pilot included measures to reduce emissions, sequester more carbon, improve soil health, promote biodiversity and protect waterways.
Speaking at the time, CBA group executive business banking, Mike Vacy-Lyle commented that the measure would allow customers to “invest in eligible initiatives that enhance both natural resources and climate resilience for the future”.
“From planting shelterbelts of trees, to water use efficiency projects, we want to support customers who are adapting to the changing climate and protecting the environment in which they operate,” Mr Vacy-Lyle said at the time.
“An important part of the loan will be verification with the customer that the funds are used for defined, eligible purposes.”
From Tuesday (16 August), CBA has confirmed that it will enable relevant agribusiness customers across Australia access to these measures.
Under the scheme, borrowers will be offered loans of up to $1 million at 3.99 per cent per annum with no establishment, line or account keeping fees.
Eligibility requirements for these loans include having more than $1 million in cash balances or existing commercial lending, having a demonstrated farming-related income, and applying to “finance an eligible environment project”.
Mr Vacy-Lyle said that agriculture is a core sector of the Australian economy, and this drive towards sustainability is “creating more opportunities for agribusinesses”.
“Agribusinesses are continuing to take actionable steps to reduce their environmental impact and often also enhance farm productivity,” Mr Vacy-Lyle said.
“Many of our customers are transforming their operations by investing in new technology and upgrading infrastructure to reduce emissions or adopt more sustainable farming practices.”
The measure followed a recent directive from CBA to provide reduced rates for sustainable activity.
In April, the bank confirmed it would be offering a lower rate for properties that meet a certain sustainability threshold.
Over 2021, the big four bank also introduced a loan for renewable technologies and announced it would be financing “Australia’s first” green build-to-rent property.
However, CBA’s national launch also followed data that suggests agribusiness is increasing in popularity.
In June, the Australian Banking Association (ABA) found that demand for agribusiness loans increased by an average of 29 per cent in the year to February 2022, reaching $4.2 billion.
Robinson Sewell broker Deb Purvis told The Adviser at the time that agribusiness has enjoyed a period of business growth.
“Low interest rates, good commodity prices and favourable seasonal conditions across much of Australia has seen record investment in land, equipment, and capital improvements,” Ms Purvis said.
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