Finance for your Arable Farm

The challenge of feeding an expanding population and the end of EU subsidies will change how farming operates. There may be a greater demand for home grown food, and the organic sector.

New technology and new equipment will be essential, and substantial investment will be essential to remain competitive. Farm consolidation, new techniques such as biomass an even new crops will be necessary.

Your farming business will need to access finance to take advantage of the opportunities.

Funding options for your farm

Of course, finance is changing too. Once, arranging the finance you needed for your farm simply meant a trip to the bank. These days, there are many more lenders and many new types of funding for you to take advantage of.

The first step in securing the funding you need is to look at the different types available. Matching your funding need with the right type of finance can reduce your costs, save you time, and make it easier to turn your plans into reality.

Fortunately, there is a range of funding options that we can help you access.

They include:

• Funding for agricultural land
• Funding for equipment with asset finance
• Asset Refinance
• Funding for plant and energy installations
• Funding for seed
• Helping Tenant farmers become landowners

Funding for land

The cost of agricultural land varies greatly across the country, but any acquisitions are likely to require large-scale funding.

Commercial Mortgages can be used to buy any kind of commercial property, including agricultural land, premises or an existing business. Repayments can be spread over up to 25 years, and interest rates are agreed on an individual basis.

However, a Commercial Mortgage may take time to arrange. Bridging Finance can be used to provide fast access to funds if you are buying a property at auction, or waiting for a mortgage to be approved.

Commercial Property Finance is arranged on an individual basis. Get our help finding the most competitive lender.

Funding for equipment

Machinery and vehicles are becoming ever more important to drive efficiency and profitability.

Your next tractor may have GPS. You may use drones to monitor your land. Anaerobic digestion, biomass, wind and solar power are all becoming key to efficient farm businesses.

Asset Finance can help make the equipment you need more affordable, by spreading the costs over time. Your new equipment can pay for itself from the extra productivity and revenue it generates.

With Asset Finance, the funds you need are secured on the asset itself. This means that if you were unable to make the repayments the lender would simply repossess the asset. It can also reduce the cost of the finance, as lower risk to the lender usually means lower interest rates to you.

There are many types of finance options for farm equipment and many types of machinery that can be acquired using it:

• Arable equipment & machinery - tractors, tillers, rollers, ploughs and harrows
• Soil cultivation machinery - cultivators, ridgers and chisel ploughs
• Planting machinery
• Seeders and reapers
• Grain and feed stores - grain sheds, grain dryers, bulk sheds, crop store and silos
• Harvesters - beet, cane, carrot harvester and combine harvesters.
• Fertilising equipment  -  manure spreaders, muck and silage handling
• Grain and feed stores - grain sheds, grain dryers, bulk sheds, crop store and siloes
• Farm Buildings - barns, sheds, shelters, extensions
• Loader Equipment - trailers, trucks and conveyor belts and telehandlers

There are several different types of Asset Finance:

Hire Purchase

Hire Purchase lets you hire farm equipment, vehicles and buildings until you have paid for them. Agreements generally last between 12 and 72 months and require a 10-20% deposit plus fixed monthly instalments, after which the equipment becomes yours. HP may be most suitable for equipment you will use for the long term.

Equipment vendors may offer HP arrangements to support their sales. But their finance plans may be designed to support their business rather than yours. Arranging your own finance from a specialist lender can be more cost-effective and mean substantially reduced costs.

Leasing

Leasing is much like a rental agreement. You pay a monthly charge to use the asset. With some arrangements maintenance, repairs, and registration will be the owner’s responsibility. It’s common for assets such as tractors and other vehicles which will have a limited life – it means you can easily update your equipment when you need to.

Contract Hire

Contract Hire is also used for farm vehicles. Payments are calculated on the purchase value less the estimated value of the vehicle at the end of the agreement. This helps keep monthly repayments down and makes it simple to switch to a new vehicle at the end of the agreement.

Our Asset Finance team can help you lease or Hire Purchase almost any type or value of farm equipment.

We can help you find financial solutions for new or used. Find out more.

Refinance Existing Assets

Your farm has probably already invested heavily in equipment. Asset Refinance lets you use that invested money again, while retaining full use of your assets. The finance company will buy the asset from you, providing you with the cash sum you need. They then let you buy the asset back from them, with a new finance arrangement.

You can use your cash again, or simply use a refinance arrangement to reduce your monthly outgoings. Find out more here.

Funding for seed

Seed costs can represent a major expense.

Dealing with the costs can eat into your working capital. The costs of running your farm will not stop there. Wages, diesel, fertilisers and pesticides all mean ongoing expense.

We can help arrange short-term working capital loans to deal with the costs. Find out more here.

Funding for building or buying a farming business

Building or buying your farm business will demand investment. While your bank may be able to provide lending, there are now many other providers who may be more willing to lend, and may be able to offer more attractive rates.

Most business loans are based around monthly repayments. However, there are lenders with experience of the farming sector who understand the pressures of seasonal cash flow. They may be able to make arrangements for quarterly repayments, or even special lending agreements to reflect harvest income streams.

Unsecured Loans don’t involve holding any assets as security against the loan, which is repaid in monthly or quarterly instalments over an agreed term, usually under 5 years. Modern lenders can provide fast unsecured lending, but you might need to provide a personal guarantee.

Unsecured Loans can be arranged to provide as much as £350,000, but borrowing at this level may be more cost-effective with a Secured Loan.

Secured Loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home, or business assets, such as your land itself.

You can have longer to repay, and enjoy lower interest rates, meaning monthly repayments can be smaller and easier to fit in with your cash flow.

Even if your business does not have the long trading history and profit record that lenders usually require, there are lenders who can help.

We’ll discuss your needs, and help you find the kind of loan to fit your business needs.

Helping tenant farmers become landowners

Buying your farm tenancy might sound impossibly ambitious, but it may be possible with a Commercial Mortgage.

You can borrow up to 60% of the full value of freehold land, which your tenanted farm will become on completion of the sale. Loans can last for up to 30 years, and can pass from generation to generation – helping you build a lasting asset for your family.  

Find out more about lending to help tenant farmers buy their farms.

Funding to support your cashflow

Cashflow is a major challenge for every business. Having to wait weeks or months for invoices to be paid by produce buyers can trigger a cashflow crisis, but there are ways to help.

Invoice Finance provides 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 you invoice.

Both Invoice Factoring and Invoice Discounting allow you to release the funds you need as soon as the produce leaves your farm.

How we help you capitalise your farming business

At Rangewell we work across the entire lending industry, and we have finance experts with personal experience in the needs of the agricultural sector, including if you are looking for finance to diversify your farming business too.

We understand the special circumstances of the farming profession - and how quarterly or even annual loan repayments may be more appropriate than the monthly repayments more familiar in other industries.

That means we can provide a unique service. We will help you to find the most appropriate funding from lenders across the market – from established high street banks to alternative funding suppliers. Our specialist teams, experienced staff and land agents can give you all the help you need to develop a proposal and choose the right loan.

Simply call us to see how we can help your farming business find the cash you need to succeed.