Sustainable Farming Incentive 2026: window 2 opens with £233 million

This article is for farmers and land managers in England who want to know what the reopened Sustainable Farming Incentive offers and how it fits with their cash flow and finance. SFI pays farmers for actions that benefit the environment, and for many farms it is an important part of income. Below we set out what has opened, who can apply and the funding options for farm businesses. Smart Funding Solutions is a broker, not a lender: we compare whole-of-market options across 300+ lenders, arranging funding from £10,000 to £20 million.

01What opened on 22 September

As Defra announced on its Farming blog, the second application window for SFI26 opened on 22 September 2026. Its budget is £233 million, made up of:

• £180 million originally allocated to the window,
• £50 million of additional investment announced by the Prime Minister, and
• £3 million left unallocated from the first window.

There is no fixed closing date. The window closes once the money is allocated, and applications started but not submitted by then will not be accepted. SFI26 agreements must start by 1 April 2027 to use this financial year's budget.

02Who can apply

To apply, a farm business must be registered with the Rural Payments Agency, have a Single Business Identifier (SBI) and have at least 3 hectares of eligible agricultural land linked to it. The full rules are in the SFI26 scheme guidance on GOV.UK.

Defra advises farmers to read the "Get ready to apply" section of the guidance first and to check that their digital land maps are correct. Farmers whose existing ELM agreements end on or before 28 February 2027 can use a new "apply early" option.

03What it means for farm cash flow

SFI payments can help, but they do not arrive straight away, and the actions in an agreement can mean upfront costs for seed, fencing or contractors. Farm income is already uneven, with harvest, livestock sales and subsidy payments arriving at different times of year, while fuel, feed and fertiliser bills come in all year round.

Many farming families are also planning for the inheritance tax changes. Since April 2026, agricultural and business property relief gives 100% relief on the first £2.5 million of qualifying assets and 50% above that, as the House of Commons Library explains. The allowance was raised from the £1 million first proposed, in a change announced on 23 December 2025. Succession plans, restructuring and buying out family members can all need funding. Professional advice on tax and succession should come first, and the funding can then be arranged to fit the plan.

04Funding options for farms

• Farm machinery finance spreads the cost of tractors and kit. Our guide to tractor finance compares hire purchase and leasing, and there is a page for combine harvester finance.
• Livestock finance funds stock purchases, repaid when animals are sold.
• Diversification finance funds new income streams such as holiday lets or farm shops.
• Land purchase finance and farm refinancing help with buying land or restructuring borrowing as part of succession planning.
• Renewable energy finance funds solar panels and other green investment.

Our agricultural finance page brings these together. Our guide to seasonal business finance explains how to fund the gaps between income.

05What lenders look at for farms

Specialist agricultural lenders understand that farm income is seasonal and often profitable on paper while cash is short. They look at the type of farming, your land and whether it is owned or rented, your accounts over several years and how much of your income comes from subsidies and agreements such as SFI. For machinery, the value of the equipment matters, and repayments can often be set annually or to match harvest or livestock sales. For land and refinancing, lenders look at the value of the farm and how the business will service the debt. Succession plans, partnership agreements and any changes to who owns the farm should be explained up front.

06How to compare your options

1. Map out your income and costs over the next 12 months, including when any SFI payments are expected.
2. Decide whether you need machinery, livestock, working capital or longer-term restructuring.
3. Have your farm accounts, land details and any existing agreements ready.
4. Use Instant Quotes to see your lender matches instantly, with no credit check.
5. Compare offers on total cost and on whether repayments can match your seasonal income.

SFI26 window 2 will not stay open for long. Get your Instant Quotes to see which lenders could fund your farm. Lenders make every decision, and all finance is subject to status.