The Solution For Forestry
- Flexible funding secured on property
- Buy woodland
- Acquire land for planting
- Acquire forestry equipment
Designed Around Your Needs
- Can be part of 'Jigsaw' Funding designed around your needs
- Monthly, quarterly and annual repayments
- Tailored around your cashflow
- An adverse credit history need not be a problem
- Repayment and interest-only available
- Roll up repayments
- Buildings as well as land
- Refinance or acquire property assets
The returns from timber make it one of the UK’s top-performing asset classes - but acquiring forest ready for logging or land for planting will take large-scale investment
Forestry has been the top-performing asset class in the UK over the past three years, with total returns at 14.7%, beating returns on commercial property, homes, equities and bonds. Of course, when it can take more than 50 years between planting out and the sawmill, it can mean challenges quite unlike other types of farming.
These may be offset by some valuable tax advantages, not least as a potential hedge against Inheritance Tax.
Planting costs are between £1,200 and £1,500 an acre when establishing a new forest, and 90% of this can be covered by a grant.
But all land is a costly purchase. You may not always have the cash you need to hand especially for a large holding. You may need to move fast to secure the plots you want. Most farmers find banks are slow to approve finance for agricultural borrowing if they will lend at all.
Commercial lenders have started to see that forestry may be suitable for lending; the market has long-term stability and forestry presents a relatively low-risk form of secured property. The current strength of the market plays a role – a greater number of investors and higher values means the banks are eager to tap into the market and provide funding opportunities which appeal to investors.
However, the high street banks are relatively new to lending to this sector. Obtaining funding and granting the required security over the forest may not be straightforward - especially as features like clawbacks may be present. Some of the unique aspects of the forestry industry, as well as purchases, may not initially fit your bank’s lending criteria.
But the solutions can be found with Bridging Finance, which can offer you the funding you need fast.
What is Bridging Finance?
An Agricultural Mortgage may simply take too long to arrange for a property deal that needs to be completed in the short term.
Bridging Loans are large-scale short-term loans. Like a mortgage, they are loans secured on the value of the land itself, but unlike a mortgage, they can be arranged very rapidly - often in a matter of days. They “bridge the gap” in funding until long term finances can be put in place.
It means that you could take out a Bridge Loan to buy a forested area at auction, or whenever a quick sale is required. With your new land secured, you can then take your time to arrange an Agricultural Mortgage. Use this to repay the Bridging Loan and repay the cost of your investment in forestry over the years when it is already generating returns for you.
Some lenders are prepared to take a second charge on property as security, meaning that the loan can be against a property which is already under finance such as a mortgage.
How much will Forestry Finance cost?
The cost of bridging is relatively high compared with long-term lending solutions - but remember, they are only designed for short-term use, which makes the costs more reasonable.
Several factors will influence the cost, including the “exit strategy”. This is how you will intend to repay the loan.
So you can use them for the short term to buy additional productive acreage at an auction or at a private sale. For the longer term, you can arrange a mortgage as an exit strategy. Bridging providers will work flexibly with their customers to determine whether their exit strategy is viable.
In addition to a monthly interest cost, lenders may charge a lender arrangement fee – a fee for setting up the loan - but all costs will be agreed when the loan is set up.
REAL EXAMPLES OF WHAT WE CAN DO
Find a Bridging Finance deal to let a farmer secure a parcel of forest land adjacent to his existing farm
Source funding to allow a farm to buy fields for planting out with Douglas fir
Found a lender to create a package of short-term funding to buy a number of plots at an estate auction
Find the most competitive funding to buy forestry equipment
Why you need Rangewell to set up Forestry Finance
Bridging Loans are intended to give you urgent funding solutions. You need to find the right arrangements and the most competitive deal - and find them quickly.
At Rangewell, we have the expertise to help you use them as a tactical source of funding for the short term, and we can work to find the most competitive source of long-term funding to replace them.
Our knowledge of funding solutions for the property sector can be an important asset for your business. Call us to find out more.
Helping you build your profits
Buy land at auctionBridging can provide solutions to buy land - forested or not planted - at auction.
Short-term fundingBridge Loans can be the most cost-effective way to raise large sums for the short term.
Funding for any purposeSecuring funds on your forestry land can actually help you to raise cash for use elsewhere in your business.
Flexible arrangementsYour income may be seasonal. We can help set up lending which reflects the nature of your income.
A fast applicationBridging Finance providers will look at your credit profile, along with the value of the asset you are securing the funding on, and your exit strategy to make a decision in the shortest possible time.
A single repaymentIn most cases, all fees, interest and charges can be rolled up into a single repayment made at the end of the loan term, when an alternative fund source has been arranged.
Download Rangewell’s free and detailed guide to Finance for the Forestry Industry
What types of finance are there - which do you need?
What is Asset Finance - and how it gives you a business advantage
Why not all providers are equal - finding the one that’s right for you
How we can help you pay less than 0%
The downsides to finance - and how to avoid them
How to arrange finance - what paperwork do you need?
Key terms explained
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