Finance for your Arable Farm
The industry faces tight margins. We can help find the funding you need to release the profits in your farm business.
Speak to real business finance experts who really understand business financeAt Rangewell our team business finance experts have real expertise. There are over 25 lenders who offer specialist finance - so use our expertise and contacts to make sure you find the funding solutions you need.
The future of farming may be hard to predict, with changing markets and growing concerns about health and the environment.Two things are certain - there will be a growing demand for produce, and an increasing demand for finance form the farmers that produce it.
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 are a range of funding options that we can help you access.
Funding for agricultural land
Funding for equipment with asset finance
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. <link>
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 Farm Machinery that can be acquired with asset finance:
· 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 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 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 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 here <link>.
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.<link>
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 <link>
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 cashflow.
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. <link>
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. <link>
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.
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.
REAL EXAMPLES OF WHAT WE CAN DO
Find the most competitive funding to allow a new contractor to set up in business
Help an established farmer find funds to acquire additional acreage
Source a lease arrangement to provide a combine harvester for a local syndicate
Find the most competitive finance for a farm consolidation
Help arrange funding for tractors and harvest equipment, a barn and grain silos in a single arrangement
What arable farmers say about finance...
Helping you build your profits
Repayments scaled to fit your operating budgetAsset finance can be arranged to help your repayments fit your monthly budget. You may not even need a deposit with some types of finance.
Reduce capital needs by spreading repaymentAsset finance avoids the need for large capital expenditure, even for major equipment. Instead spreads the cost of your vehicles and equipment over months or years.
Funding for your growing businessAsset finance can work at any scale, from a baler to a combine, trailers or even specialist grading or housing equipment. You can have additional equipment as you need it to grow your business.
Reducing the risk to your businessSome type of funding can put your business assets, or even your home at risk. Asset funding lets you avoid this risk. If the repayments became a problem, the lender could simply repossess the equipment.
A single arrangement can cover all your equipment needsAsset funding can cover virtually any type of equipment used in your business, including vehicles. A single arrangement can cover items from multiple suppliers.
Better than 0% financeSome equipment dealers may offer 0% finance deals on their vehicles and equipment. Call Rangewell to understand how we can help you pay less than these ‘interest free’ deals.
Download Rangewell’s free and detailed guide to Finance for Farming
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
You must have the right funding arrangementThere are many forms of business finance. Getting the most appropriate type for your particular needs is essential to avoid keep costs under control.
Asset finance means a monthly commitmentInvesting in new machinery with asset finance will mean repaying from month one. Turnover may not increase immediately.
Long term financial commitmentsYou may not be able to pull out of a finance arrangement once it has been set up.
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