Finance for your horticultural company

Despite the appearance of a gentle pace and an approach that has not changed for generations, the horticultural industry is going through rapid changes.  

There are intense pressures from competitors in Europe and further afield, with growers in Africa now providing cut flowers and fruit for UK consumers.  There are pressures on prices from supermarket chains.

There are also new opportunities in horticulture, many involving breakthroughs based on plant sciences, with new species and new growing techniques which can boost profitability.

Your horticultural business must have access to finance to deal with the challenges, and take advantage of the opportunities.

Funding options for your horticultural business

Of course, finance is changing too. Once, arranging the finance you needed as a grower simply meant a trip to the bank. These days, there are many more lenders and many new types of funding. Finding the most appropriate type of funding, and the most competitive lender can help you reduce your costs and support your business plans.

At Rangewell we work with growers and other businesses across the horticultural sector. We know the challenges you face and the financial answers to them. They include funding solutions to help you:

• Buy agricultural land
• Buy equipment with Asset Finance
• Refinance Assets
• Finance plant and energy installations
• Build or buy a horticultural business

Buying land

Expanding acreage to grow your business could help you achieve economies of scale. The cost of suitable agricultural land varies substantially across the regions, but any acquisitions are likely to require large-scale funding.

Commercial Mortgages can be used to buy any kind of commercial property, and agricultural mortgages can be particularly suitable for agricultural land, premises or 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, and we can help you find the most appropriate lenders for your horticultural business.

Buying equipment

Technology is becoming ever more important to drive efficiency and profitability in the horticultural industry. Pickers, conveyors and chillers have been essential for years. They are being joined by new developments, such as drones to monitor your crops. Even pot growing supported by robotics may be on the horizon, while anaerobic digestion, biomass, wind and solar power are all becoming key to efficient diversified rural 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 equipment that can be acquired with Asset Finance:

• Transplanters
• Seeders & Seeding Lines
• Tray Fillers
• Potting Machines
• Compost Handling
• Irrigation
• Sprayers & Misters
• SPID Trays
• Trimming Machines
• Tray Washers
• Floristry Equipment
• Conveyors
• Soil Blocking Machines
• Labelling Machine
• Planting machinery
• Seeders and reapers
• Buildings
• Handling Equipment
• Chillers

Hire Purchase, leasing and contract hire are all forms of Asset Finance:

Hire purchase lets you hire equipment, vehicles and buildings until you have paid for them, when they become your property.

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 agricultural vehicles. Payments are calculated on the purchase value of the vehicle less the estimated value 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 agricultural equipment, both new and used. Find out more here <link>.

Refinance Assets

Your horticultural business has probably already invested heavily in equipment. Asset refinance lets you use that investment 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 building or buying a horticultural business

Building or buying your business will demand investment. Most business loans are based around monthly repayments. However, there are lenders with experience of the sector who understand the pressures of seasonal cashflow. They may be able to make arrangements for quarterly repayments, or even special lending agreements to reflect seasonal 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 will 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.

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 can also find solutions to help tenants become landowner by acquiring their freehold.

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 horticultural business

At Rangewell we work across the entire lending industry, while our team includes experts in the horticultural  sector.

We not only understand the challenges your business faces - we know the solutions to them.

We also understand that conventional funding solutions may not be suitable, and that 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 horticultural business find the cash you need to succeed.