It’s getting rare to find the main banks offering unsecured lending facilities in the farming marketplace. Tenant farmers and start-ups without a track record have always found it hard to find suitable finance. Those financially sound farming businesses that have reached their secured credit limit also find it difficult to push their banks beyond their standard loan to value (LTV) limits that could allow them to expand.
We are excited to be working with several challenger banks who are unlocking opportunities for these types of farms and rural businesses. More lenders of this style are coming on to the market. They can offer short-term (up to 5 years) unsecured loans for a wide range of business purposes including working capital, expansion capital and asset purchase.
Who are these loans suited to?
- Tenant farmers wishing to invest and expand
- Livestock farmers buying in cattle to rear or fatten
- Arable farmers buying inputs such as seed or fertiliser
- Farmers developing property for sale or rent
- Any investment in a project with a short pay-back period
- Any intensive business with a short-term cashflow issues, for example from tax or VAT bills
- Where short-term finance is needed due to a change in contracts which put a short-term pressure on cashflow.
- Most loans are for up to £350,000 for a maximum of five years.
- Businesses must have a 2-year trading history and accounts, a minimum of £50,000 turnover and have a healthy credit history with no outstanding CCJs.
- Rates start from 6% for a low risk 6 to 12-month loan and can be 10.6% for a 5-year mid-risk case.
- Fees start at 2% depending on the loan size and term.
We see these unsecured loans as excellent opportunities for strong farm business who are being restricted from further investment and expansion or from getting working capital by their banks who can’t offer unsecured lending.
These loans offer an easy application process, a quick turnaround – we recently had a case where a £250,000 12-month facility was agreed in one week. There are normally no early repayment penalties either.
Call us to see how we can help you get fast and flexible access to finance. We are always happy to talk through your options.