Restructuring and recovery for your farming business

Crop yields vary from year to year with no warning. Harvests can fail completely. Market forces can be almost as unpredictable, affecting the prices your produce can earn - and, in the worst cases, meaning that you may be better off ploughing a crop in.

In an unpredictable business it is essential to have a safety net; something to fall back on after a particularly bad year, or a failed harvest, and which will help keep you in business until things improve.

You probably have a reserve of cash, but a run of bad years can wipe out these reserves. When there is no more money in the bank you will need external help.

Agricultural Finance can support your recovery. The ability to access funds quickly is vital to let you buy in feed, diesel and seed, to pay wages or deal with existing commitments.

In extreme cases, you may need to restructure your business.

At Rangewell, we understand the needs of the agricultural industry and can provide solutions for recovery and for restructuring.

Recovery and Restructuring Finance with a Bridging Loan

Agricultural Recovery Finance is essentially funding to help a farm up and running after a financial disaster such as a crop failure. It allows you to keep your farm running, in the expectation that the following year will offer better trading conditions and that your business can return to profit.

Agricultural restructuring goes further. Finding new, more profitable uses for your fields and outbuildings can allow you to turn around a business that has not been profitable for years. But the investment required to - for example turn pig-sties into cow sheds or a paddock into a commercial menage - will be substantial.

Converting surplus buildings into holiday lets or setting up a business park can all provide new sources of income, but the costs involved will be correspondingly high.

Agricultural Recovery and Restructuring Funding is designed to help. Both types can be provided by a Bridging Loan - which 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 a long-term financial solution to put in place.

Security

Bridging Finance is most often used to buy the property it is secured on. However, it can also be used to raise funds on property that is already owned, providing a solution for raising short-term cash for virtually any need - and a lifeline for recovery or restructuring.  

Repayments

With a Bridging Loan, you can negotiate a repayment structure which suits your needs. You can make regular monthly or quarterly repayments, or 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 your 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.

Exit Strategy

Lenders will, however, 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.

Fast

Bridging can be arranged quickly - which can be essential when your business is at risk. 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. Unlike high street banks, bridging lenders can turn a loan from application to approval in a very short space of time - sometimes in as little as 48 hours.

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.

Costs can appear high - but compared with other types of short-term funding, the interest rates are actually surprisingly reasonable.

All costs will be agreed when the loan is set up.

Why you need Rangewell for Recovery and Restructuring Finance

Recovery and Restructuring Loans are intended to let you deal with urgent funding needs, and can provide large-scale funding very quickly. However, this means that costs will be high - unless you can call on expert advice to secure the funding you need at a price that is fair.

At Rangewell, our expert knowledge can help you secure the funding you need and save you a great deal of cash.

Whatever your need - from the finance to diversify your farming business to recovery and restructuring - call us to find out more.