How do farm loans work?

Running a farm as a business can be challenging, and global competition means you need to work harder than ever to keep up. However, help is at hand in a range of farm loans and agricultural finance that can help you carry out your plans. If you need finance for your agriculture business, find out how we can help.

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What is agricultural finance?

Farming and agriculture are a big part of our economy in the UK, so it’s essential to tailor finance options to suit the needs of each business. As farming businesses often need a more significant amount of upfront investment to help keep their businesses running, lenders have adapted their finance options to offer flexible options.

A great range of agriculture finance is available to help you fund your farm, whether you need to buy an expensive new piece of machinery, purchase more buildings or land, or release some day-to-day working capital.

Our panel of lenders here at Funding Options can help you with a range of finance options for your farming business. Why not get started with us today and find the best solution for your business.

How to get a farm loan

Whilst it might not be as glamorous as the latest tractor, finance options to buy livestock, feed, seeds, and fertiliser are just as essential to keep a farm going. Spreading the input costs of a farm with an unsecured loan, for instance, can help ease the pressure on cash flow.

Having finance for buying livestock such as sheep, cattle and pigs made readily available helps a farming business continue without financial pressures. Input finance also helps with purchasing all types of animal feed, which helps keep your agricultural business running.

Tractor Leasing

Also known as ‘Tractor Hire’ or ‘Tractor Leasing’, applying for an operating lease means you can lease a tractor. A Tractor Lease can be from 12 months to 60 months depending on the lender’s requirements, meaning you’ll pay monthly instalments until your contract is up and the tractor is handed back. 

Financing big, important pieces of machinery is vital to the daily running of a farming and agricultural business, which is why this type of operating lease is another excellent funding option for farms.

Loans to buy agricultural land or new farm buildings

Due to the seasonal nature of agricultural businesses, financing more significant projects with other types of loans, such as commercial property finance, is often an excellent option for SMEs. There is a range of commercial finance options that can help farming businesses buy more land or build new farm buildings. 

Some of the agriculture-specific property finance made available helps farms invest in:

  • Grain and feed stores

  • Grain sheds

  • Grain dryers

  • Bulk sheds

  • Crop storage

  • Silos

  • Chicken sheds

  • Beef cattle housing

As well as helping with the physical growth of farming businesses with more properties and land, there are now also finance options for helping to modernise farming by investing in renewable energy projects.

Renewable energy projects on farmland

As one of the oldest industries globally, farming and agricultural businesses have come a long way to meet modern demands. Still, with the introduction of renewable energy projects, there are now more opportunities to develop further.

Asset finance is a finance option that can help purchase equipment such as anaerobic digesters. For a quick injection of cash, an unsecured loan could help finance solar panels. Asset refinancing is another option for funding renewable projects. It works by securing a loan against existing assets on your farm, helping to release funds to re-invest in the business.

As the farming industry continues to go green, more farms and agricultural businesses will seek funding to help with renewable energy projects. Our panel of lenders can help you find the proper financing for small-scale renewable energy projects on your farm. Contact us today and find out what options are available to you.

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Other short-term finance options for farm bills

There are also other short term finance options for farming businesses, such as invoice financing and working capital finance. Working capital finance is another great option to help cover a VAT bill or refinance some business debt, boosting the working capital of your farm over a shorter term.

For farming and agricultural businesses that supply customers with products and regularly invoice, invoice finance is a great short term finance option to help with late payments or outstanding invoices.

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Farm Loans & Agricultural Finance

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