Diversifying your farming business
The financial support you need
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- Flexible funding secured on land
- Expand and extend your business
- Deal with harvest failures
- Invest in new profit centres
Designed around your needs
- Funding tailored 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 lan
- Refinance or acquire property assets
Concentrating on a single crop can be a high-risk strategy. A bad harvest could put your farm at risk - unless you have some secondary income streams
Investing in alternative sources of income can give your farm both extra profits and extra resilience. From farm shops to horse riding and from holiday accommodation to business centres, farms stand to benefit from diversifying their income streams.
The challenge is likely to be getting enough capital to invest in these new sources of income.
The solution is to get external funding, and to pay off loans when those new profit centres are working for your farm business. By securing short-term lending with a Bridging Loan you can often arrange the funding you need.
A Bridging Loan is essentially a type of large-scale short-term loan secured on your property. They are so called because they “bridge the gap” until you can find long-term finances can be put in place.
Bridging Finance is secured on property, like a mortgage, but unlike a mortgage it is designed for short-term use only. It is often used to buy the property it is secured on, but it can also be used to raise funds on property that you already owned, providing a cost effective solution for raising short term cash for virtually any need - including investing in diversification.
Diversification for farms can include:
- Business centres in redundant barns and stable complexes
- Farm shops
- Storage - from caravan parking to heavy plant
- livestock products - producing and selling sheep cheese, llama farms, goat dairying
- Crop products - growing and selling speciality flowers,
- Energy crops
- Training and promotion of rural crafts
- Facilities for craft businesses
- tourism - for example, opening some of your land up for camping, or offering bed and breakfast
- Value-added products - smoked products, cheese and ice-cream
- Woodfuel projects
Farmers can find it difficult to secure finance with traditional lenders, and the once-close relationship with the local bank manager is no more.
However, at Rangewell we know that there are several specialised providers of Agricultural Bridging Finance who understand the pressures you face and can create bespoke loan packages. While Bridging Loans can be an ideal way to get a new project up and running, they are not a long-term financial solution. Few lenders will loan for more than 2 years, and a Bridging Loan will need to be repaid as soon as possible to keep your costs down. You should make sure that you have a viable “exit strategy” for repaying the loan in place before applying for a Bridging Loan.
With a Bridging Loan you can negotiate a repayment structure which suits your needs. You can defer all payments until the end of the term. This is known as “rolling up” payments, and though more expensive in the long run it lets you minimise their ongoing payments. It can provide the breathing space you need after a bad year, when it is hard to generate profit until a new harvest is brought in.
Lenders will want to know how you intend to repay the loan. This is known as an “exit strategy”, and can be either a long-term financial solution such as a remortgage or income.
How much will funding cost?
The cost of bridging reflects the scale of lending required, how it will be repaid, and how it will be used. In addition to a monthly interest cost, lenders may charge a lender arrangement fee – a fee for setting up the loan.
All costs will be agreed when the loan is set up.
Why you need Rangewell for diversification finance
Bridging Loans are intended to let you deal with all types of funding needs, and can provide large-scale finance very quickly to support your diversification plans with the investment they need. However this means that costs can be high, and that getting expert advice to secure the funding you need is essential to avoid excssive costs.
At Rangewell, our expert knowledge can help you secure the funding you need when you are ready to diversify.
Call us to find out more.
REAL EXAMPLES OF WHAT WE CAN DO
Find the most competitive funding to let an established farm set up a farm shop
Help a farmer build a craft centre in a redundant barn
Find the most competitive finance to build a business centre in a redundant drying unit and barn complex
Help an established dairy farm acquire extra land to set up a mixed operation
Help acquire convert a stable yard into holiday let
Discover your range of finance. Every type of finance for every type of business.
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.Find Funding
Helping you build your profits
Making the most of opportunitiesWhen an idea or opportunity for diversification comes along, you may need finance to make the most of it. A Bridge could be the best way to fund diversification
Short-term fundingFinance based on Bridge Loans can be the fastest way to raise large sums for the short term.
Funding for any purposeSecuring funds on your land can help you raise cash for use elsewhere - for working finance, bringing in new equipment, investment in machinery buildings or facilities.
Cost-effectiveBridging loans can provide the most cost-effective funding because they are secured on property.
A fast applicationLenders will look at your credit profile, the value of the asset, and your exit strategy to make a decision about the recovery and restructuring finance you need in the shortest possible time.
A single repaymentIn many cases, all fees, interest and charges can be rolled up into a single repayment made at the end of the loan term, when your business has regained profitability.
Download Rangewell’s free and detailed guide to Finance for Farm Diversification
How does diversification finance work?
What are the real costs - how do they vary between lenders?
Are there any downsides of an agricultural mortgage?
What paperwork do you need to apply for finance for your farm?
Guarantees and security - what they mean for your finance application
Key Terms to check
You need to know how you will repayIt is essential to have a clear payment strategy to ensure the loan can be repaid.
A long term commitmentRecovery and restructuring finance is a major commitment, which will affect the entire financial future of your business.
Your property may be at riskYou should remember that your property may be at risk if the loan repayments cannot be made to schedule.
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