Types of Agricultural Finance

Running a farm is very different from running another type of business. Agricultural businesses require a large amount of land, a lot of expensive machinery and numerous vehicles. Furthermore, farming funding is under question after Brexit, along with international trade, so farmers know the road ahead will be rocky. To keep afloat, more and more farmers are turning to agricultural finance as a means of staying in business.

If you are thinking of starting a farm, or your current agricultural project needs some TLC, your first line of thinking will be funding and financing. Although some farms are eligible for rural grants and government funding, much of these are supported by the EU.

With Brexit going ahead early next year, farmers may not be able to rely on this funding for much longer and should seek information about other funding options.

Agricultural businesses can be successful when they are in the right location and offer produce which is in demand. However, these rural projects require a lot of investment to get off the ground, which can be difficult to find. If your farm needs a funding injection, or you need some capital for a new rural site, there are many alternative financing solutions you could be eligible for.

Because of the fundamental differences between commercial businesses and agricultural businesses, it makes sense that the finance market offers different funding options for farmers. After all, a farm is usually more than a business and a livelihood – it’s a home. Farmers face a multitude of challenges today, but there are many agricultural finance experts like Genie Lending to lend a hand. Here are the specific types of agricultural finance available.

What is Agricultural Finance?

One of the most suitable options is to find a lender which specialises in agricultural finance. They will understand your particular needs as a farmer, and can supply specific funding for various parts of the business. From asset finance and vehicle finance to specialised funding for green energy projects, agricultural finance is the ideal solution for rural business owners.

What about Asset Finance?

If you don’t have the cash upfront available to invest in important farming assets, you can spread the cost over an agreed period with asset finance. Use this type of funding to buy or replace milking equipment, forestry machinery or any other apparatus with a big upfront cost.

Land and Property Development Finance

If you need to renovate farm buildings or build something new, a finance broker can help. Apply for a commercial mortgage to develop your land or existing property. There is also Project Finance which you could use for barn conversions or a farm shop to try and boost revenue.

Green Energy Projects Finance

You might see potential for more income with a green energy project. Use this type of finance to develop a wind farm, solar farm or anaerobic digestion plant.

Vehicle Finance

Farming requires specialist vehicles, and if they need replacing they can be extremely expensive. Vehicle finance can help farmers acquire tractors, feed mixers and combine harvesters if they can’t afford the full amount. You can choose between hire purchase and lease agreements.

Livestock Finance

One of the most important assets of the majority of farms is livestock. If you need more animals to produce your products then you can apply for livestock finance which can be used to invest in pigs, sheep, poultry, dairy and beef.

Business Loan

Alternatively, you could apply for a short term business loan. However, with many banks halting their lending you could have to turn to an alternative finance expert. You could get all the benefits you’d get from the bank, such as a flexible overdraft and large cash sums – but without the tedious application process.

Applying for Farm Funding with Genie Lending

Whether you need to update your farm buildings, expand your livestock or invest in new machinery to update operations, Genie Lending can help. As experts in agricultural funding, we understand the financial challenges farmers face and aim to provide an alternative to bank loans.

Applying for finance is really easy. First you just need to contact one of our business finance managers, who will discuss your project with you and the different funding options available. You may need to supply some business records, the process is fast and painless compared to a bank loan application. You could have the cash you need in as little as a few days – so you can get on with running your farm.

How will Brexit affect Farming Funding options?

The shock Brexit vote earlier this year has plummeted the future into uncertainty – and perhaps no industry more so than the farming sector. The EU supplements farmers through its Common Agriculture Policy, so without EU funding, the agriculture sector could face a blow.The Minister for Agriculture Michael Creed has said that the UK’s exit from the European Union is likely to have a significant negative impact on the CAP, particularly from 2021 onwards.
Funding for farmers is not the only problem brought about by Brexit. Without the single market which allows free trade between member states, the future of trading produce is also at risk. There could be additional costs for farmers who wish to trade abroad, and there will now be different standards for EU and UK produce.

Regardless of whether you wanted to stay or to leave, the effects of Brexit on agriculture will be far ranging. We advise farmers to get their finances prepared ahead of Article 50 being invoked – and Genie Lending is here to help.

Farm Finance Options

Currently, EU subsidies currently make up between 50%-60% of incomes on UK farms. It is not yet clear what support will be made available by the government beyond 2020, so the future of farm funding is very unstable. This instability is heightened by the fact that farmers may have to pay additional trade costs, and don’t know who they will be selling to in the future so can’t estimate their long term income.

High street banks are unwilling to lend to businesses which ae facing uncertainty. It is difficult to get approved for a business loan without years of trading history and accounts, and some banks also ask for a minimum monthly turnover. Many agricultural businesses will not be able to guarantee an allocated turnover for the next few years.

Luckily, there are now a variety of alternative financing options which are designed with farmers in mind. Rural businesses can apply for agricultural finance, peer to peer lending or asset finance to keep things turning over. Here at Genie Lending, we understand the modern challenges faced by farmers, and can recommend the best solution. Whether you need a cash injection to aid cash flow, invest in new machinery or repair outbuildings, we have the right alternative finance solution for you.

Whether it’s a new farming projects or you just need a little help to get you through a tough season, agricultural finance can help. Give us a call to speak to an agricultural finance specialist today.

UPDATED: JUNE 2018