Farming loans – are they right for me?

Farming loans can be used to invest in new plant, machinery and other equipment
Farming loans can be used to invest in new plant, machinery and other equipment

Perhaps nobody is more accustomed to seasonal ebbs and flows than farmers. As crops grow, fertilise and are harvested, livestocks mate, feed and are processed. The lifecycle of all farms varies but one thing remains true of all - this is a dynamic, ever-changing industry, and staying ahead financially is not always simple.

To meet the growing demands of suppliers, distributors and supermarkets, British farmers are increasingly looking for help to finance cultivation, irrigation, fertilisation and the many other steps in the farming lifecycle through loans.

If you are also a farmer interested in farming loans, the information below should help you understand whether taking out a loan is right for you.

Farming loans – are they right for me?

If your farm has predictable cash-flow but struggles to finance some aspects of seasonal agricultural processes, a loan will help. Whether you grow cops, manage livestock or both, a loan will give you an instant cash injection to see processes through.

If your farm has a good cash flow and you want to invest in new equipment to increase your operational efficiency, a loan is a viable option. Farming loans can be used to invest in new plant, machinery and other equipment. An example of a lender who specialises in such loans is Nationwide Corporate Finance. With them, you can take out a loan from £10k to £500k depending on your circumstances, giving you wriggle room to invest in whatever you need.

If your farm has an irregular cash-flow and struggles to finance some aspects of seasonal agricultural processes, a loan may not be the best option for you, since adding debt to an irregular cash-flow could exaggerate the problem. Before you consider a loan, attempt to get your house in order. By which we mean your finances. If you cannot wait and you need a loan soon, approach lenders with experience in the industry. Lenders with experience in the industry will be best-placed to help you on an individual basis.

As you can see, whether a farming loan is right for you depends on your circumstances, although the basic rule of thumb is this: If you can afford to repay a loan, then taking one out will give you a big, instant cash injection. If you are confident about making repayments on time, then a loan could help you grow your farming business.

Need additional advice, help or funding?

We recommend speaking with an agricultural financial advisor if you are struggling with your finances. There are many operational improvements that farmers can make to increase efficiency and reduce overheads. You might also be able to benefit from Government-backed schemes, or grants, for additional income. For example, the Basic Payment Scheme (BPS) is the biggest of the European Union’s rural grants. It is available to farmers with at least 5 hectares of agricultural land. You can apply for this grant for free. Depending on your project, you might also qualify for the Countryside Productivity Scheme.