The agricultural industry is subject to more stress from external factors than almost any other; in addition to the economic factors of supply and demand, farmers are also at the mercy of the UK’s changeable weather. While one year might produce a bumper crop the next might be a total failure, and there are very few certainties that farmers can count on.
With this in mind it’s vital that farmers have some way to counteract the annual fluctuations in their farm’s profitability, and being able to access a flexible and specialised form of finance is invaluable for those in the agricultural sector. Farm finance is a key part of any farmer’s year-to-year strategy, and without a stable backup plan that can provide cash when it’s needed farms are in a very precarious position.
While farm finance might be a necessity, farmers should be careful to understand precisely what the terms and conditions of these loans are. Although many farm finance specialists are able to provide highly tailored solutions that mirror the needs of their clients, not all loans are suitable for every situation. Therefore, farmers should seek the counsel of a professional financial advisor before committing to a financial product of any type, in order to ensure it’s appropriate for their circumstances.
As we’ve already mentioned, farmers are exposed to a multitude of factors that can place stress on their finances. Farmers know that they can’t necessarily count on a future harvest as money in the bank - while they may have made a big profit one year, they may struggle to match this with their next harvest. Because they’ll still have to meet a lot of expenses even if they have a poor year, farmers need to keep enough money on hand to pay wages and invest in more seed and livestock, but this prevents them from investing in expanding their farm. Money tied down to protect against a bad year is money that could be spent on new equipment, new land and other income-generating investments.
This is why agricultural finance can be such a useful tool for farmers: it reduces their obligation to keep cash on hand “just in case”, and lets them invest profits as and when they wish. Because farmers are able to source the finances they need from specialist lenders they no longer have to be exceptionally cautious in their spending, and can afford to take on opportunities that they might otherwise need to forego.
Agricultural lenders provide a wide range of solutions for farmers. Since they offer specialised products to farmers, the types of finance they provide can be put towards many of the most common uses on a farm, which can include:
As with many forms of specialised lending, there are an enormous number of variations on a typical farm finance loan. Each individual lender will have its own specialities and preferences, and will offer different terms and conditions to their clients. A few of the most important aspects for farmers to pay attention to are:
Farmers and landowners need to know that they have a secure and stable form of funding, and agricultural finance is key to establishing a successful farm
A diverse farm is a resilient farm, and farmers benefit from investment in alternate revenue streams - bridging loans are vital to secure expansion.
Farming is a difficult business, and farmers need to have a finance plan in place that enables them to expand and invest easily from year to year
Passing wealth and assets from one generation to the next is the primary concern of many landowners, and farmers stand to benefit from bridging finance
Farmers need a flexible source of funding that can help them grow and bridging loans for agricultural livestock finance are an ideal solution
Expanding a farm’s real estate is important and helps generate agricultural expansion. Bridging loans are useful for financing property purchases
It can be tough for farmers to raise capital in order to purchase new land, but agricultural finance lenders can arrange flexible solutions.
Agriculture is an unpredictable business which can have good and bad years. Recovery and restructure finance helps farmers get back on their feet when necessary
Investing in renewable energy generates income from farmers land with minimal effort, and bridging finance is available to help farmers go green.
Farmers with the option to purchase their land may struggle to raise the necessary capital; fast and flexible bridging finance can help to make this possible
bridging.com is brought to you in partnership between FMG and Falbros.
Falbros Media Group (FMG) is registered in England, Registered Number 11085818.
Registered office: Metro House, Nothgate, Chichester, West Sussex, PO19 1BE.
Falbros Ltd is authorised and regulated by the Financial Conduct Authority under reference number 745807.
Registered office: 1 Mayfair Place, London, W1J 8AJ. Registered in England Number 8147460.