Agriculture Finance & Farm Loans

With the agri-food sector producing £18 billion in gross export revenues for the UK annually and supporting
an astounding 3.7 million employment, agriculture plays a crucial role in the UK economy. It is therefore without a doubt a worthwhile sector.

With industry changes due to Brexit, combined with the current climate, both are affecting how they conduct business, farmers are experiencing more difficulties than ever before.

Your UK farm can grow thanks to agricultural business finance and finance for farms.

Continue reading to find out more information in relation to agricultural financing and farm finance. We’ll detail how we can support business growth and aid financial assistance to keep your farm operation operating efficiently.

Agricultural funding options

Alternative sources of funding exist for farmers and owners of farm businesses. It may be customized to meet your precise farming needs and was created with rural farmers in mind. Utilise agricultural financing to buy new machinery, animals, buildings, land and other things. There are many different options when in comes to agricultural business finance, from invoice finance, equipment leasing or an agricultural mortgage for the purchase of land, more specifically, agricultural land.

Sometimes all you require to stay ahead of the pack is suitable funding options and access to business credit lines.

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How do farming loans work?

They function very similarly to other loan products. You and the lender of your choice work together to determine the loan amount, which is often between £5,000 and £5,000,000. The loan provider then specifies their terms, conditions and fees. Following your acceptance, you’ll get the full amount and typically make monthly repayments over a fixed term.

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What finance options are available?

You have access to a variety of agricultural financing options, so it’s critical that you carefully consider each one. Comparing what is available to you will make when ensuring you have received the best option available to you. Whether that’s an agricultural overdraft, secured finance or bridging finance.

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Three popular routes to funding for you to consider:

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Livestock Finance

If you’re developing your herd, the cost of any livestock can be very costly, which can add up rapidly. Livestock with certain genetics can cost far more. You may be able to get financial support for your livestock purchases.

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Equipment Finance

Any farming operation needs machinery, which can be expensive. You may get the equipment, gear, and tools your company requires with the help of equipment financing. Asset financing, company loans, lease purchase and hire purchase are the three choices we’re going over.

Asset Finance

Loans and finance if you need to buy a new combine harvester or tractor; asset financing allows you to do so.

Which types of machines are available through asset financing?

Business Loans

There are two types of business loans: secured business loans and unsecured business loans. Your circumstances will determine which option you select. An unsecured company loan will almost always demand a personal guarantee, which means you’d be personally accountable should you fail to make your monthly payments. A secured business loan requires collateral by way of security against an asset, such as a property you own, this usually results in better advances and lower interest rates. The lending criteria will differ from lender to lender as they all provide different types of cash advances.

Find out more about secured and unsecured business loans.

Hire Purchase and Lease Agreements

If the farm equipment you require is for future investment and usage, a hire purchase is a great financial choice. It can be purchased with set monthly payments, at which point it becomes your property once fully repaid. It’s straightforward to buy equipment, cars, and farm structures with a hire purchase. This form of vehicle finance helps rural businesses keep capital employed in the business whilst spreading the cost over an affordable term.

Leasing and hire purchases are similar in that you pay for the asset over a fixed term. You never become the owner, unlike with hire purchase. If you just need the asset for the short-term, leasing can be a viable alternative for you. Compared to hire purchase, leasing is more flexible.

Funding options for New Buildings and Land

It is expensive to purchase farm buildings and land, but that doesn’t mean you can’t if you don’t have the cash on hand. This is when commercial real estate financing can come in handy. To increase your competitiveness, you can use commercial property financing to buy more farmland or construct new farming facilities.

What can financing for commercial property be used for?

Can I use a business loan to buy a farm?

You can, indeed. Due to the high cost of purchasing a farm, more farmers are choosing alternative business financing over conventional bank loans. This is due to alternative lenders providing your farming business with better interest rates and more flexible options to help grow your farm.

How to get agricultural finance

Applying for agricultural financing is a simple procedure. Fill out our enquiry form below with a few details about you and your business to get things started. After that, one of our experienced account managers will contact you to discuss the best lending options available to you.

There is no obligation to proceed with any quotes we supply and we’re a free service to use. Comparing lender offers should be done with plenty of thought because obtaining financing is not something that should be completed without careful consideration.

Please get in contact with our helpful team right away if you have any questions about our agriculture finance product.

Smart Funding Solutions are authorised and regulated by the financial conduct authority, FRN: 972740.

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Frequently Asked Questions

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Agricultural finance refers to financial products and services specifically designed to cater to the unique needs of the farming and agricultural sector. These loans offer support for various agricultural activities, including, but not limited to, land acquisition, livestock purchase, and equipment upgrades.

Farm loans are available for farmers, landowners, and agricultural businesses. Eligibility typically depends on factors such as the nature of the agricultural activity, the applicant’s credit history, and their ability to demonstrate a sustainable business model.

An agricultural loan can be used for various purposes including purchasing land, buying livestock, upgrading or maintaining farming equipment, constructing new farm facilities, and any other agricultural-related activities contributing to the growth and stability of your farm or business.

Various types of farm loans are available to suit different agricultural needs. These include short-term working capital loans, medium-term loans for equipment purchases or farm improvements, and long-term loans for acquiring land or making other substantial investments.

Before applying for agricultural finance, it’s essential to assess your current financial situation, outline your future agricultural goals, and determine the loan amount required. Additionally, check your credit score, be prepared to provide collateral (if necessary), and have relevant business or farming financial statements ready.

To apply for an agricultural loan in the UK, first research potential lenders such as banks, specialist agricultural finance providers, and government-backed financing schemes. Compile a detailed business plan showcasing your objectives, required loan amount, and repayment plan. Lastly, submit your application and supporting documents, either online or in person.

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Interest rates on agricultural loans may vary based on the lending institution, the type of loan, loan term, the borrower’s credit profile, and the presence of collateral. Shop around and compare multiple loan offers to find the best rates for your specific financial situation.

Collateral requirements for agricultural finance vary depending on the loan type and lender. Some lenders may require collateral in the form of land, buildings, livestock, or equipment, while others may consider the assets being financed as collateral.

Obtaining an agricultural loan with bad credit may be challenging, but not impossible. Specialised lenders or government-backed farming finance schemes may offer options for applicants with a less-than-stellar credit profile. It’s important to display a strong business plan and demonstrate your ability to repay the loan.

Yes, the UK government offers initiatives and support schemes to assist farmers and the agricultural sector. Some examples of such schemes include the Rural Development Programme for England and the Countryside Productivity Scheme. Visit the government’s official website for information on available programs.

The funding timeline for agricultural finance may vary depending on the lender, loan type, and the complexity of your application. For some lenders, you may receive funding within a few weeks, while others may require a longer processing time.

The ability to repay your agricultural loan early depends on the terms and conditions set by your lender. Some lenders allow early repayments without penalties, while others may charge penalties for early repayment. Make sure to review your loan agreement to understand your repayment options.

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