Rural Asset Finance (RAF), a specialist lender to UK agricultural businesses, has secured a significant funding facility that could support a lending portfolio of up to £120m for smaller farms.
Small-sized rural enterprises can tap into the fund to expand operations and explore new income streams through tailored finance options.
The facility, jointly provided by NatWest Bank and BCI Capital, is underpinned by a guarantee from the British Business Bank’s ENABLE Guarantees programme.
A portion of the capital provided by NatWest is covered under the scheme, which is designed to unlock additional lending to small businesses by reducing capital requirements for lenders.
The agreement aligns closely with RAF’s sustainability objectives, incorporating a margin adjustment mechanism linked to the achievement of environmental performance targets.
These targets incentivise increased investment in renewable energy systems and sustainable farming practices..
“This transaction with Rural Asset Finance builds on the work we have done through the ENABLE Guarantees programme to support the provision of funding to businesses in the agricultural sector,” said Michael Strevens, of the British Business Bank.
“Collaborating with established capital providers like NatWest and BCI Capital allows us to increase the availability of funding for non-bank lenders such as Rural Asset Finance and, through them, the smaller businesses they lend to.
"In addition, by including a pricing incentive linked to sustainability objectives we hope to see further expansion of small business lending in sustainable areas, including farm renewable energy installations.”
Founded in 2019, RAF offers direct and flexible lending to British farmers, supporting equipment finance and term loans that enable farm expansion, diversification, and futureproofing of rural businesses
Matthew Smart, managing director of RAF, welcomed the agreement, stating that the enhanced facility carries an attractive credit margin.
“As a result, we are now best placed to support farmers driving efficient high-tech food production, as well as those diversifying into alternative revenue streams," he added.
"Food production and diversification on UK farms are key to ensuring a healthy, robust future for the industry and the wider rural economy in the current challenging geo-political landscape.”
