Agricultural lending specialist reveals 2018 lending trends

Loans to farming businesses for restructuring finance rose by 13% in 2018
Loans to farming businesses for restructuring finance rose by 13% in 2018

Loans given to UK farming businesses for restructuring finance rose by 13 per cent in 2018, according to figures released at the Agricultural Mortgage Corporation’s (AMC) annual agent conferences.

AMC, which provides long term, fixed rate loans with no breaks to more than 9,000 farming businesses across the UK, also revealed a 5 per cent year on year increase in its net lending in 2018, with uplifts across the board for loan applications, acceptances and completions.

Restructuring finance saw the biggest increase from 2017 in terms of loan purpose last year, but AMC revealed that loans for land and farm purchases remained on top for both applications (46 per cent) and completions (40 per cent).

This picture was reflected in almost all of AMC’s eight regions in England, Wales and Scotland.

At the regional conferences, AMC’s agricultural managers also shared that there was a shift towards the usage of interest only elements within loan structures last year.

In 2017 annuity loans accounted for 55 per cent of lending, but this dropped to 45 per cent in 2018, in favour of elements of interest only (53 per cent).



AMC works closely with 289 land agents from over 60 firms across the UK, who carry out its loan application and valuation work.

A number of these agents, and key stakeholders from AMC’s network in the region, attended the eight conferences held across the country during March and April.

The groups reflected on 2018 and discussed issues facing the sector, including the potential impact of Brexit, land prices and lending opportunities for the year ahead.

In addition to being a record year for its loan book, 2018 was also a year that saw AMC’s exceptional levels of service rewarded by its highest recorded Net Promoter Score (NPS), which indicates customer satisfaction, of 80 per cent in Q4.

Andrew Naylor, Managing Director AMC
Andrew Naylor, Managing Director AMC

Andrew Naylor, Managing Director AMC, said: “This year’s series of annual conferences saw AMC’s agents, who brought in 58 per cent of its loan applications in 2018, reflect on a year that saw significant challenges for the industry.

“They also shared what customers are looking for when it comes to purchasing agricultural land and diversifying their farming practices.

“The overwhelming feedback from both customers and agents has been that farming businesses continue to request long-term facilities, providing much needed certainty during an uncertain time for the sector.



“Farming businesses need to prepare for the future and structuring finances appropriately is an important part of ensuring loan repayments are affordable so that businesses can continue to grow and navigate times of uncertainty.

“It’s important to consider options for growth and discuss the viability of expansion projects to ensure they’re well positioned to evolve and succeed, whatever the future holds.”

Headquartered in Andover, AMC has worked with land-based commercial farming businesses since 1928 to support a wide range of growth and diversification initiatives, covering everything from an initial land purchase to large scale investments.