For AgriStarter Loan and Farm Investment Loan borrowers and those who submitted Drought and AgBiz Drought loan applications after interest-free terms ended last September, interest rates will reduce to a record low of 1.77 per cent.

The drop - from 1.92 per cent - comes as part of a regular, six-monthly review of the RIC's concessional interest rate, dropping once again after decreasing from 2.11 per cent in August of last year.

Minister for Agriculture, Drought and Emergency Management David Littleproud and Minister for Finance, Simon Birmingham both said the interest rate drop will provide significant assistance to the farmers and small businesses most in need.

"The Australian Government is continuing to deliver on its commitment to back Australia's farmers during tough times like drought," Mr Littleproud said.

"We remain committed to providing practical help to rural and regional communities to achieve economic growth and agricultural productivity."

"This further rate reduction will put more money in the pockets of our hardworking farmers, helping to boost their cash-flow and support them to further invest in growing their operations," Mr Birmingham said.

RIC chief executive officer Bruce King said he's hopeful the benefits might allow reinvestment of savings back into businesses, particularly those still managing through or recovering from drought.

"The RIC is here to help farmers and farm-related small businesses in financial need of a concessional loan, and we're pleased to see the RIC's variable interest rate fall to another record low," Mr King said.

"The five years' interest-only terms on our loans can assist our customers to invest in their businesses to either recover more effectively from recent tough drought conditions, expand and explore new markets or establish a new farm business."

RIC loans currently offer five years' interest only and five years' principal and interest payments over 10 years, with an option to refinance the remainder with the customer's commercial lender at the end of the loan term.

Customers who have qualified for the interest-free period on the drought-related and AgRebuild loans will continue with their approved terms.

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