Farm Loans

Farm Loans for UK Businesses

Farm loans or agricultural finance is a specialised financial products for farmers and agricultural businesses to purchase land, equipment, livestock, or cover working capital and operational costs. These loans come in various forms, including long-term mortgages for land, flexible short-term loans for operational expenses, and asset financing for machinery. They offer tailored repayment terms to accommodate seasonal income and can be secured by assets like land or equipment or offered as unsecured loans for shorter-term needs.

Farm loans can be a valuable financing option for agricultural businesses that need fast, flexible access to funds. These loans offer the freedom to invest in key areas, whether it's managing seasonal costs, expanding operations, & purchasing new or used assets which due to age or asset type, are not suitable for conventional asset finance.

At MAF Finance Group, we work with a broad network of banks and alternative funders to help find the right fit for your farm. From your initial enquiry through to securing the funds, we manage the process so you can stay focused on running your farm.

What is a Farm Loan?

A farm loan is a form of business loan that is tailored towards farmers or those in the agricultural sector. Farm loans can be used for a wide variety of needs, such as purchasing land or new buildings, livestock, farming equipment, as well as for day-to-day operational expenses.

Multiple facilities make up farm loans, with farmers able to select from agricultural mortgages, working capital loans, unsecured business loans and livestock finance, depending on their specific requirements.

Depending on the type of loan chosen, farm loans can be both short-term and long-term methods of finance, with many of the options providing flexibility in their repayment terms.

What type of farm loans are available?

Agriculture mortgages: An agriculture mortgage ensures farmers and agricultural businesses can purchase or refinance a property. As with other mortgage methods, capital is borrowed against the property’s value. The purposes for agriculture mortgages include acquiring a new building, buying land for upcoming developments, a property renovation, or expanding on current premises.

Working capital loans: This finance method provides farmers with the capital required to manage operational expenses. This short to medium-term finance solution ensures farms can cover expenses such as rent, payroll, and stock. This type of finance is used most commonly for keeping operations uninterrupted, especially during seasons of changing demand.

Unsecured business loans: This loan type is granted to farms based on their creditworthiness, rather than being bound to collateral. This solution may be suited to businesses who do not want to use assets as security and require a solution that provides flexibility and a quick turnaround. Unsecured loans also do not have early repayment fees, meaning farmers can use them for bridging gaps or funding inventory.

Livestock finance: This method of finance enables farmers to purchase animals, whether that be to increase the number of livestock, or bring the livestock operations up to date. With this facility, loan terms are parallel to the revenue cycle of the livestock, ensuring there are no delays in capital.

Example of how a farm loan application would work

Step 1 – Once you reach out to us, we’ll ask you to provide key information. Based on factors such as your farm operation and the purpose of the loan, this may include your latest financial statements, recent bank statements covering up to the past 6 months, and personal details of any farm owners or partners involved.

Step 2 – After a review, we will submit your application to our network of funders. Typically, you can expect a response within 48 hours. During this process, identification and verification checks will be conducted for the business and its owners to comply with regulatory standards.

Step 3 – Once you have agreed to the terms and conditions, we’ll send the necessary paperwork for you to sign and return. After completing all final checks, the loan amount will be disbursed to your account.

Benefits of farm loans

• Flexible offerings
• Diverse range of finance products available
• Cash flow injection
• Manage day-to-day costs
• Tailored to agriculture businesses
• Repayment holidays
• Have short and long-term options available
• No collateral with unsecured lending
• Manage seasonal fluctuations
• Refinance existing agreements

What can I use a farm loan for?

Farm loans are used to provide finance to businesses in the agricultural sector, covering a wide range of needs.

Uses for farm loans include:

• Agricultural Buildings
• Farm Fixtures & upgrades/refurbishments
• Renewables investments
• Cow Collars/Farm Management systems/ Other Hardware & Software
• Polytunnels/Slurry Tanks & Pits/Prefab Concrete Walls etc
• Shepherd Huts/Portacabins/Glamping pods
• Other unsecured assets
• Small Land Purchases
• Diverse Income Projects (eg. Paddle Courts)

Things to consider for a farm loan

What to consider when applying for a farm loan:

Finance Type: Multiple finance agreements are a part of farm loans

Guarantees: Maybe required depending on the finance product

Purpose: Can be used for both short-term and long-term needs

Age: Your business will need to be a minimum of 6 months old to be eligible

Term Length: Varies depending on the method of finance selected

Why use a finance broker for a farm loan?

Exploring the farm loan landscape can be a complicated process. This is where a finance broker can be useful as we can help identify the right funder, ensuring you receive a solution tailored to your needs, meaning you can focus on the day-to-day running of your farm.

Many banks have complicated processes and security taken which you may not need to give. Other reasons a finance broker farm loan can be more appealing is due to the finance amount you require can sometimes be limited by the bank.

Additionally farm loans are comparatively straight forward in paperwork so long as there’s a quote to match or exceed the loan amount, no invoice is required which means no title is taken on the goods. We will still measure serviceability and other factors so as to remain responsible lenders.

How to apply for a farm loan

MAF Finance Group can compare offerings from a comprehensive selection of funders, ensuring your funding is tailored specifically to your farm.

If you need further information or want to get a quote, fill out the form below and we will be in touch. If you would like to speak to someone directly, call us on 0115 958 6872 and a member of our team will happily speak to you. Alternatively, email us at [email protected].