Getting funding for your horticultural business 

By Richard Mitchell
Content writer
Last update: 31 March 20201 minute read
Getting funding for your horticultural business 

Table of Contents

The UK horticulture industry is worth over £5 billion each year. Businesses growing fruit and veg employ over 50,000 people, while ornamental plant nurseries and garden centres produce and sell millions of plants, and create thousands more jobs.

The market is growing as health and environmental concerns turn consumers away from red meat and processed foods - but they also face challenges. The horticultural industry is going through rapid changes with competitors in Europe, and even growers in Africa, now providing cut flowers and fruit for UK consumers. 

There are also pressures on prices from supermarket chains.

But there are also new opportunities. Increasing demand for organic produce and new plant types means new scope for profits. Your horticultural business must have access to finance to deal with the challenges and take advantage of the opportunities.

“Look at the produce in your local supermarket - you can find vegetables flown in from Kenya and Spain. You can compete with them on quality and price - but you need to work hard to do it.”

Finding the funding you need for your horticultural business

Getting the finance you needed to invest in a new business venture, or to grow an operation that was already successful, may need expert help. 

At Rangewell we work closely with the horticultural industry sector, and we know the lenders who can help - and the best way to approach them to secure the funding you need. There are many types of loan, and many lenders, and we have found that the first step in securing the funding that is right for your horticulture business is to match your funding need with the right type of finance.

“The thing is, with a horticultural business, you are a specialist. Most lenders don’t understand specialists, so they say they can’t help you. You need someone like Rangewell who know the lenders who do know what your business is about. They are specialists too.”

Funding for land

Buying land, or an existing farm or smallholding may be essential, whether you are starting up or taking on acreage to grow your business economies of scale. The cost of suitable agricultural land varies substantially across the regions, but any acquisitions are likely to require large-scale funding. Having sufficient land to expand, and room for storage to harvest and process larger crops may be essential for your future.

Commercial Mortgages can be used to buy any kind of commercial property, and agricultural mortgages can be particularly suitable for agricultural land, premises or an existing business. A specialised agricultural mortgage can even be spread over generations and can offer annual or quarterly, rather than monthly, repayments.

You may be able to borrow up to 80% of the value of farm buildings or land, and have repayment terms between five and 30 years - but all Commercial Property Finance is arranged on an individual basis and costs vary greatly between different providers. This makes it essential to have expert help to get a deal that keeps your costs low.

If you already have suitable land, a Secured Loan may be simpler to arrange and could be the most cost-effective way to pay for greenhouses, sheds and other buildings you need.

“I had ten acres which meant space was always tight. When the land alongside mine came up for sale I had to have it. Rangewell helped me buy it and, as a result, I’ve doubled the size of my operation - and the profits it generates.”

Funding for equipment

Buildings and equipment are basic needs for any farm business. Barns, a tractor and packing equipment are becoming vital to reduce the need for expensive labour. Some crops, such as grapes and apples, will require significant capital for infrastructure and irrigation systems.

Asset Finance can help make the equipment you need more affordable, by spreading the costs over time. It includes both Hire Purchase (HP) and leasing.

HP agreements generally last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments, after which the equipment becomes yours. Leasing, on the other hand, is much like a rental agreement. You pay a monthly charge to use the asset and, with some arrangements, maintenance, repairs, and registration will remain the owner’s responsibility.

Asset Finance can even be arranged for secondhand equipment, which can be handy for machinery that will give you years of service, such as a tractor or trailer. Our Asset Finance team can help you lease or Hire Purchase almost any type or value of farm equipment, new or used. 

“We all try to cut corners and make an old piece of kit last until it falls apart, but it can be a false economy really. New equipment usually pays for itself faster than you think.”

Funding for Working Capital 

Your horticulture business will, no doubt, have a number of finance needs just to operate.

Most high value horticultural crops are harvested by hand, requiring a significant labour input and will also require regular ongoing management, such as pruning, pest and disease control and irrigation. The reality is that you will have to provide workers’ wages for months while you are waiting for any payment to come in after harvest. 

Some horticultural crops will require a regular supply of fertiliser, pesticides, herbicides, composts, mulches, and you may need a regular supply of seedlings. Cost may be year-round - but your income may be strictly seasonal.

Working Capital Loans can ensure that you have the cash flow you need to deal with the ongoing costs and cover your operations until you can start generating real profits.

“Horticulture is just not like other businesses. You have costs coming in all year round - but you only have income for around four months. You need a solution for that.”

Waiting for plants to grow may not be the only delay. Having to wait weeks, or even months, for invoices to be paid by large buyers is not unusual and can trigger a cashflow crisis for your business. Invoice Finance provides a solution, with cash advances based on the value of invoices you have issued, but have yet to be paid for – in effect, letting you get paid as soon as produce leaves your farm.

Finding finance for your horticultural business

There are lenders with experience of the farming sector who understand the pressures you face, including those of businesses with seasonal cash flow. That means that by approaching the right lenders, you may be able to agree quarterly repayments, or even special lending agreements to reflect seasonal income streams.

But you need a funding expert on your side. At Rangewell, we work across your sector and know the lenders who are most likely to offer the funding you need - and if your funding needs are particularly complex, ask us about Jigsaw Finance packages made up of various finance types and tailored to your needs. So, if you are looking at plants and horticulture service financing, find out how we can help or apply for funding today.

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