R&BS are currently seeing some very competitive margins being offered by banks on farm and rural business loans. We have recently obtained loan margins as low as 1.5% above base rate and have often seen them below 2%. In our experience, we haven’t seen margins as good as these for about seven years.
Margins are becoming more competitive as the banks and lenders have sorted out their internal issues following the credit crunch. They now have more money and are more prepared to lend.
Farm finances are not often reviewed
Whilst all farmers and rural business owners are experienced with negotiating purchases of inputs and livestock and in negotiating rates and rents, bank finances are rarely addressed with the same scrutiny. Yet bank loans, mortgages and overdrafts can have major implications on the farm or rural business for years to come. Many businesses only review their banking when there is a change of local bank manager or if their business or personal circumstances change.
With bank margins improving now is a good time for all farm and rural businesses to review their finances, and check to see if their historical arrangements are still the best for the business.
Professional help can bring rewards
Don’t be afraid to ask for professional help from your bank manager or another third party. Some of this professional support may be an added cost, but the costs the business may already be incurring could be even higher.
The potential benefits from a review of your finances could include costs savings from rescheduling hard core overdraft debt onto longer term loans with lower interest rates, or restructuring the loan and repayment profile to better suit the cash position of the business. Payments could be adjusted or rescheduled to aid investment in a new project or enterprise or to give the business more flexibility for future investment. A review now could also help your bank better understand the business, its objectives and its current position which can help to strengthen the overall banking relationship.
How R&BS can help
R&BS can help guide you through the process of reviewing your existing finances and make recommendations, if appropriate. By working closely with you and your bank we can understand your business needs, review your existing finance arrangements, offer business and finance guidance and if appropriate, find you finance that better fits your circumstances.