There are around 32,000Â farms in South Africa. They 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. Specialised agricultural finance has grown to plug these gaps – providing tailored long-term loans to buy land and expand production. 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.
Agricultural loans offer several benefits to farmers and agricultural businesses, some of these benefits include:
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.Â
The application process for an agricultural loan typically involves several steps and varies depending on the lending institution and the specific requirements of the loan.
Generally, farmers or agricultural businesses interested in getting financing will need to submit an application form provided by the lender. This form typically requests detailed information about your personal and financial background, the purpose of the loan, and the specifics of the agricultural operation.
Along with the application form, you may be required to provide supporting documentation such as financial statements, business plans, and estimated income and expenses. Lenders use this information to assess your creditworthiness and the potential for repayment. Depending on the size and complexity of the loan, the lender may conduct a thorough evaluation process.
Once the application has been reviewed and approved, the lender will finalise the terms of the loan, including the interest rate, repayment schedule, and any collateral requirements. You will then be required to sign the loan agreement and fulfil any additional requirements before the funds are disbursed.
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
Written by
Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.
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