Everything you need to know about agricultural finance

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Agriculture contributes billions to the UK economy. In fact, it added as much as £13.9 billion in 2022. It also feeds and clothes the nation, rears our animals and plays a significant role in protecting our natural environment. Here’s everything you need to know about agricultural finance from Origin Finance who help to provide farm finance, agriculture finance and farm machinery finance options for businesses in the UK.

And yet, it’s been a tough time for many who own agribusinesses. The way that farmers finance their operations has changed, with Britain moving away from EU subsidies to a range of new UK grants and programmes. Unfortunately, the transition to post-Brexit agricultural funding has been painfully slow (the new funding measures were revealed almost *five years* after Britain had left the European Union). There are also concerns that the new payment plans offered by the UK Government favour larger arable farmers, leaving smaller farmers in a potentially tricky position.

To survive, many farmers are diversifying their businesses by opening restaurants, accommodation (or other hospitality operations) or by creating business parks or self-storage centres – all of which need capital investment.

So, what are the alternative financing options available for farmers? In this article, we provide an overview of agricultural finance.

What is agricultural finance? 

Agricultural finance covers the funding needs of farmers or other forms of agribusiness. Agricultural finance is available for rural businesses, such as farms, vineyards, fertiliser producers, floral businesses, hydroponics, beekeepers, equestrian businesses, or any other types of nature-related business.

The agriculture sector relies heavily on finance due to the large costs involved in purchasing new equipment, machinery, and vehicles. To make sure that you get the most competitive option on the market, it can help to approach a lender who specialises in your specific industry – in this case, agriculture. As a specialist in agricultural finance, we’re well-placed to understand your circumstances.

To give you an idea of the options available, we explain the main financing options available for agribusinesses below. 

Building conversions 

Fit-out loans are available for the conversion of buildings, whether that’s for farm use or for helping your business diversify by fitting out an existing building as a farm shop, restaurant, or accommodation. Types of finance for building conversions also include hire purchase, finance lease or business loans (see below).

Plant and machinery finance 

Plant and machinery, aka asset finance, can be used to buy farming essentials such as combine harvesters and crop sprayers or animal feeders and cattle guards.

Plant and machinery finance lets businesses spread the payment costs over several years with monthly payments, which can be a blessing for farmers as equipment costs are often fairly hefty. It’s also available for both new and used equipment, giving extra flexibility if cost control is a consideration.

Commercial vehicle finance 

Commercial vehicle finance is an option for buying essential agricultural vehicles such as tractors (including the various attachments that come with them), trailers, specialised vehicles (e.g., for transporting livestock), or anything else that you can think of for farming. As with plant and machinery expenses, vehicle outlays can be huge for farmers so many would choose commercial vehicle finance to help spread the costs over a set period of time.

Livestock finance 

As well as vehicles and equipment, it’s also possible to get a loan for cattle if you’re looking to build (or improve) your herd for meat, milk or hide farming. And it’s not just limited to cattle, livestock finance can be available for a variety of different animals such as sheep, poultry, and pigs. Livestock finance also doesn’t just cover the purchase of the animals; it can be used for purchasing feed, medical care and shelter.

Equipment finance 

Equipment finance can be used to fund the purchase of essential farming equipment. For example, a vegetable farm might use equipment finance to buy a greenhouse, polytunnel or automated watering system.

Business loans 

Business loans can cover a lot of projects for farmers and agribusinesses, offering funding options for various purposes such as land expansion, crop diversification, or infrastructure development.

Refinance 

Refinance of existing agricultural equipment to release working capital.

Farmers can raise capital by using their existing machinery, equipment, or even land as collateral. For instance, a dairy farm might refinance milking equipment to invest in more cows or improve feeding systems. Similarly, a grain farm could refinance their fleet of tractors to invest in more efficient harvesting machinery.

Renewable energy 

Finance can even be used for investing in power generation. For example, buying and installing solar panels for fields or building an anaerobic digestion plant.

Can loan payments be seasonal? 

Yes! Many farms operate seasonally, so we’re able to offer seasonal payments to meet their needs. This means that for certain loans like equipment, business or fit out finance we can aim to secure higher repayments during busier times of year and lower repayments during the slower 

How Origin Finance can help 

We’re passionate about supporting a thriving farming and agricultural industry right here in the UK.

As experts in agricultural finance, we’re able to help your business find a tailored financial solution for your unique needs. As industry specialists, we can access a wide range of agriculture-specific lenders (some of whom only work with commercial finance brokers). This means that we can find you the most competitive financing option out there.

Need financial support for your business? Drop us a line for a free no-obligation quote to find out how we can help your farm or agribusiness.

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