When Farm Debt Mediation Does Not Cover Your Rural Business
Agribusiness Finance
Farm debt mediation · Farm mortgage · Rural business enforcement
The scheme does not cover every rural business or every farm-related security. Seven separate tests can put you outside it, and once that happens the questions change fast: what can the lender enforce, can AFCA pause recovery, what should you ask recoveries for, what is exposed under the security, and can a refinance or negotiated exit settle before control moves?
Quick Answer
Farm debt mediation does not apply merely because your business is rural or because the lender holds security over farm assets. Coverage can fail on the farmer test, the security being enforced, the scheme and lender, the state involved, insolvency or earlier-default rules, or because you are a guarantor rather than the borrower. When it is off, there is no mediation gate from that Act, so check the lender's security, whether AFCA can pause recovery, the free-help options and whether a documented exit can settle in time.
Start where you are
- A demand or default notice has arrived. Read what the lender can do next, then check AFCA immediately.
- A receiver, controller or administrator has been appointed. Read when the Act stops applying, then whether an exit is still realistic.
- Nothing has landed yet and you are checking exposure. Read what can actually be taken and what a general security agreement reaches.
- You have been told you are not a farmer under the Act. Read the farmer test and what evidence decides it.
- Your lender is a non-bank or private lender. Read whether the scheme reaches that lender and whether AFCA reaches it. Those are different tests.
Also called: rural debt mediation; farm business debt mediation; farm debt mediation eligibility; rural debt enforcement.
Does farm debt mediation cover your rural business?
Farm debt mediation does not automatically cover a rural business. Coverage depends on seven separate questions: what your business principally does, what debt and security the lender is enforcing, whether that scheme reaches the lender, which state law is engaged, whether insolvency or an earlier mediated default changes the position, and whether you are actually the borrower rather than a guarantor standing behind it.
| The test | The question it asks | Where it is answered |
|---|---|---|
| Your business | Are you solely or principally engaged in a farming operation, or in Queensland is farming your sole or main business? | Who counts as a farmer |
| Your security | Is the lender enforcing a qualifying farm mortgage, or an excluded stock, crop, wool or leased-machinery security? | What the Act reaches |
| Your lender and scheme | Does the scheme reach the creditor? Western Australia is materially different from the statutory schemes. | Non-bank and private lenders |
| Your state | Which state's law applies to the property and security being enforced? | Which state's Act applies |
| Your insolvency status | Has the borrowing entity entered an insolvency status that the Act expressly excludes? | When the Act switches off |
| The history of the debt | Has the same debt already been through a mediated default or other application limit? | Earlier-default limits |
| Your role | Are you the farmer who owes the debt, or a guarantor or non-borrowing landowner? | Guarantors and landowners |
The point is not that every state applies the same seven rules in the same words. It does not. The point is that being a farmer is only the first gate. A business can satisfy the farmer test and still be outside the scheme because the lender is enforcing a different security, because the Act has stopped applying, or because the person whose asset is at risk is not the borrowing farmer.
This page deliberately owns the outside-the-scheme question. If you are inside a farm debt mediation scheme and need the notice, mediation and certificate process, use the main Australian farm debt mediation guide.
Which state's farm debt mediation Act applies if your farm crosses a border?
The Act that applies is the one governing the state each parcel of land and each security sits in, which is not necessarily the state you bank in or the one you live in. There is no national scheme to fall back on, so a business running country in two states can find one block inside a scheme and the other outside it, on a single facility.
Do not use the lender's address, your home address or the state named on a bank statement as a shortcut. Farm debt mediation is state based, so multi-state property and water rights need to be mapped to the law and security that actually govern them. Treat cross-border property as a coverage flag and have your solicitor map it before enforcement, rather than relying on a generic national answer.
The practical version, for a business with country in more than one state: work out which Act each parcel sits under before a notice arrives; expect the answer to differ parcel by parcel rather than facility by facility, because one loan does not mean one Act; and check the water instrument separately, because the states name different ones and an entitlement is usually held under the law of the state the water is in.
Who counts as a farmer under a Farm Debt Mediation Act?
A farmer for farm debt mediation is not simply anyone who owns rural land or earns some income from agriculture. New South Wales, Victoria, South Australia and Tasmania use a test built around being solely or principally engaged in a farming operation, while Queensland asks whether the person's or entity's sole or main business is a farming business.
The practical issue is proportion. A business that grazes cattle but earns most of its revenue, employs most of its staff and uses most of its plant in contract earthmoving can have a much harder time showing that it is principally a farming business. A rural address, primary-production tax treatment or agricultural customers do not answer the statutory test on their own.
| Business | How the farmer test usually reads |
|---|---|
| Commercial cropping or grazing business | Usually inside the farmer test, subject to the rest of the Act |
| Corporation whose main business is farming | Usually inside the farmer test, subject to the rest of the Act |
| Share-farming landowner named by the relevant Act | Can be inside where the statutory definition expressly reaches the arrangement |
| Queensland funded new entrant establishing a farming business | Queensland has a specific pathway for this category |
| Rural contractor or earthmoving business | Usually outside if servicing farms is the principal business rather than farming |
| Cartage and haulage operator | Usually outside |
| Agricultural services business | Usually outside |
| Agistment operation | Fact-sensitive and should not be assumed either way |
| Hobby farm or lifestyle block | Usually outside; Tasmanian government material expressly excludes lifestyle and hobby farming operations |
Hobby farms, lifestyle blocks and mixed-income businesses
If most household income comes from off the property, that does not automatically decide the Act, but it is a warning against assuming that rural land equals a statutory farming business. Mixed-income and mixed-activity files should be tested using current business evidence rather than the label on the property. For the finance side, see the agribusiness finance guide and the guide to buying a farm.
Can a mixed farming and contracting business lose farm debt mediation coverage?
A mixed farming and contracting business can lose farm debt mediation coverage. It becomes harder to fit within the farmer test if its actual activity and revenue mix moves away from farming, which means the evidence at the time of enforcement can matter more than the label the business used when the loan was written.
Build the evidence before the notice. The useful records are the current accounts, revenue split, management reports, contracts, staffing, plant use and evidence of what the business actually does. If those records now describe an earthmoving, transport or services business that also farms, the farmer test needs legal advice rather than an assumption.
Do not wait for the lender to decide it for you. If your business model has drifted, ask your solicitor to test the current position before an enforcement step. That answer affects whether you prepare for mediation or immediately prepare for the commercial enforcement, complaint and refinance pathways set out below.
A grazing operation takes on contract earthmoving through several dry seasons. By year four the contracting side employs most of the staff, runs most of the plant and books most of the revenue. Grazing continues, but the current accounts no longer read like a business principally engaged in farming.
When enforcement starts, the business should not assume the farm debt mediation gate still applies simply because it once did. The practical job is to get the activity mix and security position tested quickly, then prepare the correct pathway before the next enforcement step.
Does farm debt mediation protect equipment finance, stock loans and crop finance?
Farm debt mediation protects equipment finance, stock loans and crop finance differently in every state, and in three states it does not protect them at all. In New South Wales, Victoria and South Australia, stock mortgages, crop or wool liens and the lessor's interest in leased farm machinery sit outside the protected farm-mortgage definition, while hire purchase over farm machinery is expressly included. Queensland uses a different definition, and Tasmania's current Act expressly includes several securities the older mainland Acts exclude.
| State | What the protected definition reaches | Important exclusions or inclusions |
|---|---|---|
| New South Wales | Farm property includes a farm, farm machinery and a water access licence. Hire purchase over farm machinery is expressly included. | Stock mortgage, crop or wool lien, and the lessor's interest in leased farm machinery are excluded. |
| Victoria | Farm property includes the farm, farm machinery and the relevant water interest. Hire purchase is included. | Also excludes certain security interests in stock, crops or wool under personal property securities law. |
| South Australia | Farm property includes the farm, farm machinery and relevant irrigation or water rights. Hire purchase is included. | Uses a similar exclusion structure to Victoria for stock, crop, wool and leased machinery interests. |
| Queensland | Farm property includes land, a water allocation, and vehicles, machines, tools or other things usually used in farming. | The Act does not use the same express exclusion list as New South Wales, Victoria and South Australia, so do not import those states' carve-outs into Queensland. |
| Tasmania | The Farm Debt Mediation Act 2024 is in effect and covers farm property including farm machinery and the relevant water interest. | The Act expressly includes hire purchase over farm machinery, stock mortgages, crop and wool liens, and the lessor's interest in leased farm machinery. |
The same tractor can produce two different answers. Hire purchase can sit inside the protected definition while the lessor's interest under a lease sits outside it in the older mainland Acts. Read the agreement behind the machine, not just the asset description.
Tasmania is no longer a future-tense scheme. The Tasmanian Farm Debt Mediation Act 2024 came into effect on 4 December 2024. Some older Commonwealth summaries still omit Tasmania, so use the current Tasmanian register and Department of State Growth material for the present position.
Primary sources: New South Wales legislation, Tasmanian legislation, and the relevant state legislation registers. The finance structure itself is covered in the agribusiness finance guide.
Can a lender take cattle, crops, tractors or water rights without farm debt mediation?
A lender can take cattle, crops, tractors or water rights without farm debt mediation in some states, and the security document behind the asset decides more than the asset name does. In New South Wales, Victoria and South Australia, excluded stock, crop, wool and leased-machinery securities can sit outside the farm-mortgage mediation gate. A tractor on hire purchase can be treated differently from the same tractor on lease, while water rights sit in a different security system again.
| Asset | Farm debt mediation position | What decides it |
|---|---|---|
| Cattle and other livestock | Stock-mortgage protection differs by state. New South Wales, Victoria and South Australia expressly exclude stock mortgages; Tasmania expressly includes them. | The security being enforced and the state's farm-mortgage definition. |
| Wool and standing crops | Crop and wool liens are excluded in New South Wales, Victoria and South Australia and expressly included in Tasmania. | The statutory carve-out or inclusion and any PPSR security. |
| Tractor or harvester on hire purchase | Hire purchase over farm machinery is expressly included in the older mainland definitions and Tasmania. | The hire-purchase interest. |
| The same machine on lease | The lessor's interest is excluded in New South Wales, Victoria and South Australia and expressly included in Tasmania. | The lease rather than the machine itself. |
| Water entitlement | Water instruments are treated as farm property under the state schemes, but water rights are not ordinary PPSR collateral. | The farm mortgage or water security, not a general security agreement alone. |
| Farm land | Real property is the core farm-mortgage asset where the statutory scheme applies. | The real-property mortgage and the relevant state Act. |
This is why the right question is not just “can the bank take my cattle?” It is “which creditor is enforcing which security against which asset in which state?” That sounds technical, but it is the map that decides both the legal pathway and whether a refinance can actually discharge every party that needs to be paid.
Does farm debt mediation apply to a non-bank or private lender?
Farm debt mediation can apply to a non-bank or private lender under a statutory state scheme, but Western Australia's separate voluntary scheme is different. Do not use “bank versus non-bank” as a national rule: check the creditor definition in the relevant Act or scheme and then separately check whether the lender is an AFCA member.
New South Wales is not limited to banks. Its Act defines a creditor by the farm debt owed, not by a bank licence. Victoria, Queensland, South Australia and Tasmania likewise operate statutory schemes rather than a simple “bank only” eligibility rule.
Western Australia is the exception in structure. Its current voluntary Farm Debt Mediation Scheme is open through 30 June 2027. The scheme guidelines exclude debt not issued by an Australian authorised deposit-taking institution, subject to stated exceptions for specified public lenders, and expressly list non-ADI equipment finance as ineligible.
| Scheme | Lender test | Practical consequence |
|---|---|---|
| New South Wales, Victoria, Queensland, South Australia and Tasmania | Statutory schemes. Coverage turns on the Act's definitions of farmer, debt, creditor or mortgagee, and farm mortgage or farm property. | Do not assume a specialist or non-bank lender is outside merely because it is not a bank. |
| Western Australia | Voluntary scheme. Current guidelines generally restrict qualifying debt by lender type to ADI-issued debt, with stated public-lender exceptions. | A private or commercial-only non-bank facility can sit outside the WA scheme even where the business is unquestionably a farm business. |
Read the current Western Australian scheme page and scheme guidelines. Then run the separate AFCA test below, because a lender can be outside farm debt mediation and still be inside AFCA, or outside both.
When can farm debt mediation stop applying even if you are a farmer?
Being a farmer is not enough if an application limit in the Act has already switched the scheme off. Insolvency and earlier mediated defaults are two important examples, and the exact trigger differs by state, so this is a section for identifying the issue rather than substituting for state-specific legal advice.
| Circumstance | Confirmed example | What it means for the customer |
|---|---|---|
| Personal insolvency or bankruptcy process | Queensland and Tasmania contain express insolvency exclusions in their application provisions. | Do not assume the mediation gate becomes stronger as the financial position worsens. Formal insolvency can remove it. |
| Corporate external administration | Queensland excludes a Chapter 5 body corporate; Tasmania excludes an externally administered corporation. | If an administrator is appointed, check the Act immediately rather than assuming mediation still stands in front of enforcement. |
| Earlier mediated default on the same debt | Queensland, New South Wales and Tasmania contain application limits connected with earlier default or mediation. The conditions are not identical. | A prior mediation does not create an automatic second mediation gate. |
| You are a guarantor or non-borrowing owner | Coverage can depend on whether the person is actually a party to the farm debt process, rather than merely having property exposed by a guarantee. | Map the borrower, guarantor and owner separately before relying on the Act. |
Formal insolvency can invert the customer's expectation. People often assume protections increase as distress gets worse. Some farm debt mediation Acts do the opposite on particular insolvency statuses. If an appointment or bankruptcy step is imminent, get the application section read before the event rather than after it.
Can a lender enforce against a guarantor or family property if farm debt mediation does not apply?
A lender can potentially enforce against a guarantor or against family property even where farm debt mediation does not apply to the borrower. A guarantor, the borrowing entity and the owner of a property offered as security can have different rights and different exposure. Being outside farm debt mediation for the borrower does not by itself answer what can happen to a spouse, parent, director or third-party landowner who signed a guarantee or mortgage.
| Person or role | What to check | Why it matters |
|---|---|---|
| Borrowing company or trust | The facility, default position and securities granted by the borrower. | The borrower may lose control of secured assets if a receiver or controller is validly appointed. |
| Director or personal guarantor | The scope of the guarantee, any separate security, and whether the lender or facility falls within AFCA's jurisdiction. | AFCA can consider some complaints about guarantees relating to eligible small-business or primary-producer facilities. |
| Spouse, parent or other family guarantor | Whether they guaranteed the debt, mortgaged property, or did both. | Their complaint and security position can be different from the company's even though the debt originated in the business. |
| Third-party property owner | The mortgage or other security actually granted over the property. | Owning the secured property is not the same as being the borrower, so map the owner, guarantor and borrower separately. |
| A New South Wales guarantor whose obligations are secured by a farm mortgage | Whether an exemption or prohibition certificate decision is reviewable. | The New South Wales Rural Assistance Authority says such a guarantor may apply for internal review of specified certificate decisions. |
Do not assume the lender must exhaust the borrowing company's assets before looking to a guarantor, and do not assume the opposite either. The sequence depends on the guarantee, mortgage, facility documents and applicable law. If family property is exposed, get the guarantee and the property security read together before agreeing to a standstill, sale or refinance timetable.
There are two separate complaint pathways worth checking. In New South Wales, a guarantor whose obligations are secured by a farm mortgage can seek internal review of certain certificate decisions. Separately, AFCA says complaints can be made by guarantors of small-business loans in some circumstances, with special monetary treatment where a guarantor's principal home is security. See New South Wales Rural Assistance Authority internal review and AFCA on guarantee complaints.
If a guarantee is already being called, read what happens when a personal guarantee is called and what a director's guarantee covers.
Can a lender appoint a receiver or enforce if farm debt mediation does not apply?
A lender can appoint a receiver and take other enforcement steps where farm debt mediation does not apply, because that Act is not supplying a mediation certificate or prohibition gate in front of enforcement. What the lender can actually do next depends on the facility and security documents, general law, any court process, and any complaint or standstill that validly affects recovery.
| Step | What it changes | Where to go next |
|---|---|---|
| Demand or default notice | Puts the default and required remedy into a formal timetable. | Check the notice, lodge any internal dispute quickly and ask for a dated standstill if you need time. |
| Statutory demand on a company | Creates a separate Corporations Act timetable with serious insolvency consequences. | Statutory demand guide |
| Winding-up application | Moves the matter into court and can put control of the company at risk. | Winding-up application guide |
| Receiver or controller appointment | Can move control of secured assets and revenue away from directors immediately. | Receivership exit window |
| Calling a guarantee | Turns a company debt problem into a personal asset problem for the guarantor. | Personal guarantee called |
| Enforcing a general security agreement | Targets secured personal property of the business according to the registration and priority position. | What a GSA reaches |
| Possession and sale under real-property security | Targets the land under the mortgage, subject to the legal process that applies. | Get state-specific legal advice and check AFCA eligibility before assuming there is no complaint pathway. |
The customer decision point is whether control has moved yet. Before appointment or possession, a complaint, standstill, sale or refinance may still be negotiated with the borrower in control. After a receiver, controller or administrator is appointed, the same exit can require the appointee's cooperation and the timetable usually becomes less forgiving.
Can AFCA stop or pause enforcement on a rural business loan?
AFCA can sometimes pause enforcement on a rural business loan. If AFCA accepts and registers an eligible complaint against an AFCA-member financial firm, AFCA's rules generally require the firm to suspend collection and recovery action relating to the complaint while it is open, subject to the Rules, limited preservation steps and any AFCA consent. That can be a critical pathway when farm debt mediation does not apply, but it is not available against every commercial lender.
| AFCA test | Current rule or limit | Why it matters now |
|---|---|---|
| Is the financial firm an AFCA member? | AFCA can only consider complaints about member financial firms. | Commercial-only and private lenders are not necessarily required to join AFCA, so check membership first. |
| Is the complainant a small business? | AFCA defines small business as fewer than 100 employees, including primary producers. | A rural contractor or agricultural services business can qualify even where it is not a farmer under a farm debt mediation Act. |
| Is the credit facility within AFCA's small-business jurisdiction? | For complaints lodged on or after 1 January 2024, AFCA states that it cannot consider a small-business credit facility that exceeds $6.3 million. This threshold is indexed and can change, so confirm the current figure with AFCA. | Check the facility amount, and the current threshold, before relying on AFCA as the enforcement pathway. |
| Has an eligible complaint been registered? | AFCA's complaint rules generally restrict the financial firm from pursuing collection or recovery action on the debt while the complaint is open, subject to exceptions and AFCA consent. | This can create time to resolve the dispute, but it is not a substitute for complying with court deadlines or getting legal advice. |
| Has a statement of claim or debt-recovery proceeding already started? | AFCA says a member firm must not start or continue specified debt-recovery proceedings relating to a registered complaint, subject to the Rules, procedural limits and any written AFCA consent. | Contact AFCA immediately, but keep complying with every court deadline. An AFCA complaint is not a court filing. |
| Is there already a default judgment? | AFCA can consider some complaints asking a member firm to suspend enforcement of a default judgment where its Rules allow it, but AFCA cannot set the judgment aside. | A realistic refinance or sale pathway can matter to how long a delay is considered reasonable. |
| Has a receiver already been appointed? | AFCA may be able to consider a dispute about the secured creditor's right to appoint a receiver, but it cannot review the receiver's conduct or intervene in the receivership itself. | If a receiver is appointed over all company assets, control of a company complaint can also pass to the receiver, so the difference between before and after appointment is fundamental. |
Do not assume that merely sending a complaint stops enforcement. Start with the lender's internal dispute resolution process, check the firm in AFCA's Financial Firm Search, and if enforcement or legal proceedings are active contact AFCA promptly. ASIC's commercial-loan guidance expressly says AFCA can resolve eligible small-business lending complaints, including complaints involving primary producers, but commercial-only lenders may sit outside membership.
Official sources: ASIC on commercial loan disputes, AFCA for small businesses, AFCA on corporate insolvency and receivership, and AFCA's current Rules and Operational Guidelines.
What can a lender take under a general security agreement?
A registered general security agreement can reach broad categories of the business's personal property, including livestock, crops, machinery, receivables and inventory, but it does not by itself reach land or water rights and it may rank behind a correctly registered purchase money security interest over particular collateral.
| Asset on a rural business | Inside a registered general security agreement | What reaches it instead |
|---|---|---|
| Livestock, including unborn young, and products such as wool | Yes | Not applicable |
| Crops, growing or harvested, and stored grain | Yes | Not applicable |
| Farm machinery, equipment and tools | Yes | Not applicable |
| Accounts receivable, inventory and business bank accounts | Generally yes as personal property, subject to the security agreement and specialised account or control rules. | The facility and account-control arrangements can affect how the security works in practice. |
| Land, and interests in land | No, the register lists it as not affected | A real property mortgage |
| Fixtures on land | No, the register lists them as not affected | A real property mortgage over the land |
| Water rights | No, the register lists them as not affected | The water instrument itself, which the farm debt mediation Acts do reach |
| Some statutory rights, the register's example being a commercial fishing licence | No, the register lists them as not affected | The statute that creates the right |
The line that matters most on a rural business is the one between the crop and the ground it is growing in. The crop, the grain in the shed, the livestock and the wool are personal property and sit inside the general security agreement. The land, and things that have become fixtures on it, are not, and reaching those needs a real property mortgage. That is also why a lender holding only a general security agreement will look for property security separately, which is the ground covered by second mortgage lending.
What does a PPSR search tell you before a refinance?
A PPSR organisation search tells you which security interests are registered against the exact organisation identifier you search. It does not tell you the amount of the secured debt or the value of the assets. That distinction matters in recoveries because a search can show who claims security, but it cannot tell you the payout required to release that security.
- A company is usually searched using the correct organisation identifier. The PPSR uses a hierarchy of identifiers and commonly uses the ACN where the company has one.
- A trust or partnership can need extra care. A trustee of a trust with an ABN and a partnership with an ABN can be organisation grantors, while trusts or partnerships without an ABN can require searches against the relevant individuals.
- A sole trader is searched as an individual. Having an ABN does not turn the sole trader into an organisation grantor for this purpose.
- More than one search can be sensible. The PPSR says an organisation search only returns registrations against the identifier entered, so entities with multiple identifiers, changed names or uncertain registration history may warrant additional searches.
Save the search certificate. It is the legal record of what the search returned on that identifier at that time. For a refinance, combine that certificate with title searches, facility documents and payout figures rather than treating it as a complete security map on its own. See the PPSR organisation-search guidance.
When an equipment financier ranks ahead of your bank
Priority under the Personal Property Securities Act is rule-based rather than a simple ownership question. Earlier perfected interests often have an advantage, but statutory priority rules can change the order. The most important rural-business exception here is a correctly registered purchase money security interest, or PMSI. The PPSR explains that a properly registered PMSI can take priority over an earlier all-assets security over the same collateral.
In practice that means specific equipment finance over a machine, and crop-input or feed finance supplied on retention of title terms, can outrank the lender holding the general security agreement for those particular goods. The register also describes an extra priority for the agricultural case, where goods supplied to develop livestock or improve and grow crops are registered correctly and the crops are planted or the livestock acquired inside the period the legislation sets, so the supplier can take priority in the resulting crop or livestock.
Why this matters to a borrower rather than to a financier: it changes who you are actually negotiating with, and it changes which assets are genuinely available to satisfy which debt. A recoveries conversation that assumes one lender controls everything will go wrong if a correctly registered equipment or input financier sits ahead of it on the assets that matter. You can read the register's own material at the personal property securities register education hub.
Where can you get free help if farm debt mediation does not apply?
Being outside farm debt mediation does not mean being outside free support. The Rural Financial Counselling Service reaches eligible farmers, fishers, foresters and small related businesses in financial hardship, while the Small Business Debt Helpline is available to small business owners and sole traders. AFCA and the small business ombudsman sit in different parts of the dispute pathway.
| Service | Who it can help | What to use it for |
|---|---|---|
| Rural Financial Counselling Service | Eligible farmers, fishers, foresters and small related businesses experiencing or at risk of financial hardship | Free independent financial counselling, action planning, lender discussions and referral to other support. |
| Small Business Debt Helpline | Small business owners and sole traders in financial difficulty | Free financial counselling on business and personal debts, guarantees, payment arrangements and closing or restructuring a business. |
| Your lender's internal dispute resolution team | Borrowers disputing conduct, amounts or enforcement decisions | Put the issue and requested outcome in writing before escalating externally. |
| Australian Financial Complaints Authority | Eligible consumers and small businesses complaining about an AFCA-member financial firm | External dispute resolution. See the AFCA enforcement section because membership and jurisdiction matter. |
| Australian Small Business and Family Enterprise Ombudsman | Small and family businesses needing dispute support or help finding the right pathway | Dispute support and referral where the problem does not fit a single scheme cleanly. |
| Your solicitor | Anyone facing a demand, court deadline, guarantee call, possession or appointment | Legal rights, security interpretation, limitation issues and urgent court or insolvency steps. |
The Australian Government's national better practice guide for farm debt mediation treats early engagement as a core principle and recommends current financial information, professional support and proactive communication before matters harden into enforcement. It also says personal and mental-health issues affecting a farmer's ability to engage should be taken into account. If stress or illness is affecting your ability to respond, say so rather than disappearing from the process.
What should you do in the first 48 hours after learning mediation does not apply?
The order matters because the customer's options usually narrow as control moves. Do the information and dispute work before the borrowing work.
- Put the notice, facility agreement, guarantees, security documents and latest statements in one folder. The answer will be in the documents, not in the product name.
- Ask recoveries in writing what step is proposed and the earliest date it may occur. Ask whether a dated standstill or forbearance is available.
- Ask for an itemised payout figure. Do not build a refinance around the statement balance if interest, legal costs, recovery costs and release fees are still moving.
- If you dispute the lender's conduct, amount or enforcement decision, lodge a written internal complaint and check AFCA membership immediately. If a statement of claim or urgent enforcement step is already underway, contact AFCA and your solicitor promptly.
- Call a free financial counsellor before you borrow. The Rural Financial Counselling Service and Small Business Debt Helpline do not need you to take a new loan.
- Run the security searches. A PPSR search, title position and list of guarantors tell you who you are actually negotiating with and what has to be released at settlement.
- Do not make a token payment or written acknowledgement of an old or disputed debt merely to buy goodwill without legal advice. Ask your solicitor whether it changes any limitation or admission issue in your state.
- Then test the exit. A broker can only assess a refinance sensibly once the payout, priority position, enforcement timetable and post-settlement business position are known.
If pressure is also coming from tax debt, the defaulted ATO payment plan guide covers that separate clock.
Official support: Rural Financial Counselling Service and the Small Business Debt Helpline on 1800 413 828.
Can you refinance a rural business loan once the file is in recoveries?
You can sometimes refinance a rural business loan after the file has moved to recoveries. Being in recoveries does not automatically make a rural business unfundable, but the file becomes an exit-and-timing problem rather than a normal application. The incoming lender needs evidence that its money can settle the outgoing debt, obtain the required releases and leave a viable position after settlement before the next enforcement step changes control.
Ask for a dated standstill or forbearance if one is available. A verbal assurance from a recoveries officer is not a settlement timetable. The incoming lender needs to know what will and will not happen before the proposed settlement date.
What needs to be inside the payout figure?
Ask for the payout to be itemised. Depending on the facility and stage of recovery it can include principal and arrears, accrued or default interest allowed by the documents, recovery and legal costs, release or discharge fees, and costs connected with removing registrations or securities. The reason the payout matters more than the statement balance is that several components may still be moving while the refinance is being arranged.
What should you give a broker or incoming lender first?
Start with the documents that answer the exit, not a long explanation of what went wrong:
- the demand, default notice and any court, receiver, controller or administrator documents
- the facility agreement, guarantees and security documents
- the latest statements and an itemised payout figure
- the PPSR search and the known title or property-security position
- current management accounts, BAS or other current trading evidence relevant to the business after settlement
- a list of other secured creditors, tax debts and payment arrangements that affect the exit
- any written standstill, forbearance or agreed discharge pathway
A property-secured exit may involve second mortgage lending or, where timing is the binding issue, a caveat loan. If the business needs working capital rather than a refinance, business finance options are a different problem. Before committing to a settlement date, read what a discharge authority does.
What changes if you refinance before or after a receiver is appointed?
Before appointment, the borrower or directors will usually still be the people negotiating the payout, standstill, discharge and incoming facility. After a receiver is appointed over secured assets, those assets are under the receiver's control to the extent of the appointment, and a refinance or sale may require the receiver and secured creditor to cooperate with the release and settlement process.
ASIC says a secured creditor can appoint a receiver where its security interest gives that power, and the receiver's powers then come from the security agreement, appointment documents and the Corporations Act. AFCA separately says that where a receiver is appointed over all company assets, control of the company's own AFCA claim generally passes to the receiver. That is why the practical refinance window is not simply “before or after default”. The sharper boundary is often whether control has moved.
From our broking, indicative
On distressed rural files the binding question is usually not “will someone look at it?” but “can the exit be evidenced and completed before control changes?”
- A clean payout and security map is more useful than a persuasive story about why the arrears happened.
- Multi-state property, multiple PPSR registrations and guarantees slow the exit because each release has to be understood before settlement.
- Once a receiver, controller or administrator is appointed, the range of workable exits can narrow because the appointee controls part or all of the process.
- Files commonly fail on missing or late evidence rather than on the first credit conversation.
Qualitative only. No rate, timing band or approval likelihood is stated because a business already under enforcement cannot be responsibly reduced to a generic number. Current as at the review date shown at the top of this page. General information only.
An agricultural services business that did not satisfy the farmer test had its facility moved to recoveries. With no statutory mediation gate to wait on, the useful sequence was a free financial-counselling call, a written standstill request, an itemised payout, a PPSR and security map, and an agreed discharge pathway before the incoming lender was asked to commit.
The refinance settled because the exit was documented early enough to be tested. The lesson is not that every recoveries file can be refinanced. It is that a refinance is only as real as the payout, release path, timing and post-settlement position behind it.
Farm debt mediation is a narrow statutory gate, not a general protection for every rural borrower or every farm-related asset. A rural business can fall outside because of the farmer test, the security being enforced, the lender or scheme, the state involved, insolvency or earlier-default rules, or because the person whose asset is exposed is a guarantor rather than the borrowing farmer. Once the Act is off, the customer's next job is to map the security and timetable, check AFCA membership and jurisdiction, use free financial counselling, and test any refinance or negotiated exit before control moves.
Key takeaway: do not spend the first days arguing about the label “farm debt mediation”. Work out exactly why it does not apply, what the lender can do next, what can pause or challenge that step, and what evidence an exit needs.Frequently asked questions
Possibly, but not automatically. The statutory question is whether farming is the sole, main or principal business under the relevant state test. If the contracting side now earns most of the revenue, employs most of the staff or uses most of the plant, get the current activity mix tested rather than relying on how the business was described when the loan was written.
Usually not where the principal business is providing contracting, earthmoving, transport or agricultural services rather than carrying on the farming operation itself. The exact result depends on the state definition and the business facts. Being outside the Act does not remove the free counselling, AFCA or refinance pathways described on this page.
Usually not. A lifestyle or hobby operation can fail the commercial farming test even though the property is rural and productive, and Tasmanian government material expressly excludes lifestyle and hobby farming operations. If the block is part commercial and part lifestyle, have the activity and ownership structure checked rather than assuming.
It is fact-sensitive. Agistment is not a safe label for assuming coverage either way because the legal question is what business is actually being carried on and how the relevant Act defines farming. Treat it as unresolved until the agreements, activity and revenue model have been checked.
It can under the statutory state schemes. New South Wales, Victoria, Queensland, South Australia and Tasmania do not operate as a simple bank-only rule. Western Australia is different: its current voluntary scheme generally restricts qualifying debt by lender type to ADI-issued debt, subject to stated public-lender exceptions. Check the state scheme and then separately check whether the lender is an AFCA member.
It depends on the security and state. New South Wales, Victoria and South Australia expressly exclude stock mortgages, crop or wool liens and the lessor's interest in leased farm machinery, while hire purchase over farm machinery is expressly included. Tasmania's current Act expressly includes several of those securities. Queensland uses a different definition and should be read on its own terms.
A lender can enforce against livestock where it holds an enforceable security that reaches them, but farm debt mediation does not treat stock security the same way in every state. New South Wales, Victoria and South Australia expressly exclude stock mortgages from the protected farm-mortgage definition, while Tasmania expressly includes them. A PPSR priority issue can also decide which secured party ranks first.
Potentially. The borrowing entity, guarantor and owner of secured property can have different rights and exposures. A spouse, parent or director may have signed a personal guarantee, granted a mortgage over property, or both. AFCA can consider some guarantee complaints involving eligible small-business or primary-producer facilities, and in New South Wales a guarantor whose obligations are secured by a farm mortgage may seek internal review of certain certificate decisions. The actual enforcement sequence depends on the guarantee, property security and applicable law. See the guarantor section above.
If farm debt mediation does not apply to the farmer, debt or security being enforced, that Act is not supplying a mediation gate before the appointment. The lender still needs a valid contractual and legal basis for the appointment. If the financial firm is an AFCA member, an eligible registered AFCA complaint can also affect recovery action, so check that pathway before assuming there is nothing to do.
Sometimes. AFCA says that once an eligible complaint is registered against an AFCA-member financial firm, its rules generally require the firm to suspend collection and recovery action on the disputed debt while the complaint is open, subject to exceptions and AFCA consent. AFCA defines small business as fewer than 100 employees and, for complaints lodged on or after 1 January 2024, says it cannot consider a small-business credit facility that exceeds $6.3 million. Commercial-only or private lenders may not be AFCA members.
Yes. The Rural Financial Counselling Service provides free and independent counselling to eligible farmers, fishers, foresters and small related businesses experiencing or at risk of financial hardship. The Small Business Debt Helpline is also free for small business owners and sole traders. You do not need to take a new loan to use either service.
Sometimes. Recoveries changes the file into an exit-and-timing problem. An incoming lender needs a current payout, the security and priority position, the release pathway, the enforcement timetable and evidence that the business is viable after settlement. A written standstill can help if one is available, but a verbal assurance is not a settlement plan.
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