There are more than 200,000 farms in the UK and in 2021, they contributed 0.5% to our GDP, provided half the food we eat, and employed almost half a million people.
Clearly, farming is big business, but unfortunately, it’s also very seasonal. Many farms suffer from erratic cash flow caused by patchy income and volatility in the prices they pay for supplies and the prices they achieve for their products. This can leave many farms struggling to expand, unable to cover supply costs, and late to pay mandatory obligations, such as VAT. Specialised agricultural finance has grown to plug these gaps – providing tailored long-term loans to buy land and expand production, VAT loans to keep the taxman happy, and working capital finance to meet the daily needs. Read on for an overview of agricultural loans and how they can help you grow your farm into a high-performing business.
Many farms are land rich and cash poor, with income that is volatile. Their erratic cashflow may be the result of seasonal patterns, or it could be caused by slow payment by large wholesale buyers. Either way, lack of working capital, or investment funds to expand, puts a brake on profitability and can cause permanent harm to the business. Farmers often need funding to buy more land, build infrastructure, pay for supplies, such as seed or cattle, and invest in new machinery. Fortunately, as diverse as farmer funding needs may be, there are just as many loans available, and they can cover almost all eventualities and for every type of farm.
A long-term loan used to buy a whole farm, farm buildings, or land to extend the property. Borrow up to 90% of the purchase price, with the farm or land providing security for the loan. Pay the loan back over 1 – 25 years.
Use this type of finance to pay for new construction or re-development of existing structures, such as silos, grain sheds, feed stores, cattle shelters, chicken sheds, barns and crop storage sheds.
A form of lease that can pay for new plant and machinery. Use the purchased item while you pay for it. The asset acts as security for the loan.
Short-term borrowing to plug the dips in cashflow. Suitable for almost any day-to-day expense. Pay for supplies and services, distribution costs, maintenance expenditures and more. May be obtained with or without security.
Functions like a bank overdraft. Dip into the available cash pool as and when you need it. Pay back what you borrow as customer payments come in.
Avoid HMRC penalties through late payment of your VAT bill. Short term loans to help you spread the cost over more than a quarter.
Farms may need more than one type of financing to cover their immediate, mid-term and long-term needs. Trying to organise different agricultural loans from different lenders can be slow and disappointing. Working with a broker, who can access many types of financing from a wide range of lenders, can solve this dilemma. No more searching or completing endless applications. Simply indicate your funding needs, tell us what you wish to accomplish, and leave the rest to us.
You reap what you sow. Get the best rate, the best terms and the right agricultural loan for your farm. Contact Swoop today.
Swoop was amazing! I was looking for refinancing and they were straight onto finding me the best possible option. I would highly recommend them.
Owner, F45 Cambridge
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