Agricultural Finance

Finance to support and grow your farming business

Agriculture is vitally important to the UK economy, with the agri-food sector generating £18 billion of gross export earnings for the UK each year — the sector also provides a staggering 3.7 million-plus jobs. So it’s without a doubt a valuable industry.

Farmers are facing more challenges than ever before with Brexit, climate change, and fair pricing, all impacting how they do business. There are 149,000 farm businesses in the UK, and according to Countryside, that’s more than the number of businesses involved in the motor trade, education, finance, and insurance.

Rural finance can help grow your UK farm

If you’re in need of financial support to keep your farm business running effectively, read on to learn more about how agricultural finance and farm loans can help support business growth.

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What is agricultural finance?

Agricultural finance is an alternative form of funding for farmers or farm business owners. It’s specifically designed with rural farms in mind and can be tailored to suit your exact farming needs. Use agricultural finance to purchase new equipment, livestock, land, buildings and more.

Sometimes, a cash injection is all you need to help you remain competitive in a busy and volatile marketplace.

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How do farm loans work?

Farm loans work much like any other loan product. You work with your chosen lender to agree on a loan amount then the lender will set out their terms and conditions. After you accept the terms and conditions, you’ll get the amount in full and usually make repayments monthly, with interest for the agreed term.

Types of agricultural finance available

There are many types of agricultural finance available to you, and it’s important you research each option thoroughly. Understanding which funding option is best for you means you can be assured you’re getting the best deal for what you have planned for your farm.

We’re talking you through three financing options: livestock finance, equipment finance, and funding for land and new buildings.

Livestock Finance

Buying a dairy cow can cost anywhere from £1,000 to £1,500, which can add up quickly if you’re building your herd, particularly if you’re purchasing high-pedigree animals with prized bloodlines can cost much more. Livestock finance can help support you in these purchases. Use it to purchase: sucklers, beef, poultry, dairy and pedigree.

Equipment Finance

Machinery is essential for any farming business, and it’s costly, too. Equipment finance allows you to access the tools, machinery and equipment your business needs. Three options we’re talking through are: asset finance, business loans, and lease and hire purchase.

Asset Finance

If you need to purchase a new tractor or combine harvester, no worries, you can acquire them through asset finance.

What kind of machinery can you get through asset finance?

• Tractors, balers and more farm machinery
• Forestry equipment
• Robotic milking machines
• Recycling equipment
• Plant equipment
• Renewable energy equipment

Business Loans

A business loan comes in two forms — an unsecured business loan or a secured business loan. Which one you choose will depend on your circumstances. A secured business loan requires collateral secured against it, but you can borrow more money, and an unsecured business loan will more than likely require a personal guarantee, which means you’d be personally liable should you default on your monthly repayments.

Lease and Hire Purchase

Hire purchase is a great financial option for your farm if the equipment you need is for long-term use. You can pay for it in fixed monthly instalments until the last payment when it becomes your owned property. You can use hire purchase to purchase machinery, vehicles and farm buildings.

Leasing is similar to hire purchase in that you pay in monthly instalments for the item. But unlike hire purchase, you don’t ever own it. Leasing could be a good option for you if you need the piece of equipment just on a short-term basis. Leasing is more flexible than hire purchase.

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Funding for Land and New Buildings

Buying land and new farm buildings are expensive, but just because you don’t have money in the bank to purchase it doesn’t mean you can’t. This is where commercial property finance can lend a helping hand. Commercial property finance can help you purchase more agricultural land or build new farming premises to better compete.

What can you buy with commercial property finance? All kinds!

• Grain, chicken, or bulk sheds
• Crop storage and feed stores
• Silos
• Grain dryers

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Can you get a business loan to buy a farm?

Yes, you can. Buying a farm is an expensive investment, and more and more farmers are turning to alternative business finance over traditional bank loans. This is because alternative finance can offer better interest rates and more flexible options for your farming business.

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How to get agricultural finance

To apply for agricultural finance, it’s a straightforward process. To see you loan options, fill in our short quote form below and provide basic information about yourself and your farming business. We'll then match you to trusted UK lenders on our panel. You will then be able to request quotes direct from the lenders you choose.

You are under no obligation to accept any quotes that land in your inbox. Take your time to compare lender offers; after all, securing finance is not a decision to be rushed.

We’re online brokers here at Capalona, meaning our service is free for you. Our only goal is to help your business grow through financial support; we’re here to help you. Ready to see what farm loans you're eligible for? Get started today.