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Agricultural lending: a distinct category
Farming businesses — whether arable, livestock, horticulture, or mixed — operate on production cycles that bear no resemblance to monthly or quarterly revenue models. A combinable crops business may spend heavily on seed, fertiliser, and agrichemicals in autumn and spring, then receive the majority of its annual income in a single marketing campaign following harvest.
This profile demands lenders who understand agricultural cash flow and are prepared to structure facilities around production cycles rather than calendar-year repayment expectations. Mainstream lenders without agricultural expertise often struggle to accommodate this.
Seasonal working capital and harvest finance
A seasonal working capital facility — drawing down at input season and repaying from harvest receipts — is the core instrument for arable businesses. The facility should be sized to cover peak input costs including contractor charges, fuel, crop protection, and rent, with a clear repayment trigger linked to harvest proceeds.
Grain storage and marketing flexibility allow a farmer to sell at a higher price by holding crop off-market. Some lenders will advance against certified stored grain value, enabling the company to meet immediate liabilities without being forced to sell at harvest-time prices.
Machinery and equipment finance
Tractors, combine harvesters, sprayers, drilling equipment, and grain storage infrastructure represent substantial capital outlay with useful lives of ten to twenty years. HP and finance lease are standard, often with deferred start or balloon payment structures that align repayment with harvest income.
Agricultural machinery lenders familiar with the sector will assess residual values against published auction data and factor in the effect of hours, condition, and specification on resale. Specialist agricultural asset finance providers may offer better terms than generalist equipment lenders.
Land acquisition and farm purchase
Agricultural land is a significant long-term asset and can support secured lending for business investment. Commercial mortgages on agricultural land are available at loan-to-value ratios that reflect land quality, location, and any planning or development potential.
Buying additional land — whether neighbouring parcels or entire farms — typically requires a combination of equity and debt. The repayment capacity test is challenging in agriculture because net margins on commodities can be thin in unfavourable years; directors should stress-test proposals against commodity price downside scenarios.
Diversification and alternative income streams
Many farming businesses have diversified into renewable energy (solar, wind, anaerobic digestion), farm shops, holiday accommodation, and contract services. These activities generate more regular income than core farming and can strengthen the overall credit profile of the business.
A lender assessing a farming company with diversified income should ideally receive accounts that separate farming and non-farming revenues clearly. Diversification projects themselves may require specific project finance — for instance, solar array installation — which can be secured against the generating asset and the FIT or export income it produces.
Frequently asked questions
Can a farming company borrow against its Basic Payment Scheme or Sustainable Farming Incentive entitlements?
BPS entitlements historically had lending value in some structures, but the transition away from BPS toward SFI and other ELM schemes changes the landscape. Some agricultural lenders will advance against confirmed SFI or Countryside Stewardship agreement income; confirm current lender appetite as the policy framework continues to evolve.
Is grain stored on-farm acceptable security?
Stored grain can be acceptable security where it is certified, insured, and covered by a storage contract or warehouse receipt. Lenders require independent verification of quantity and quality. Uncertified on-farm storage with no third-party warrant is difficult to lend against.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.