How to get an agricultural mortgage

Agricultural mortgages are available to those wishing to buy their first farm, extend their existing farm, or purchase rural property or land for another purpose. 

Finding the right rural property or piece of farmland can be a challenge. Not only do we have a shortage of rural land, but prices have also sky rocketed since the recession. According to areportby Savills, the value of farmland increased by 277% between 2006 and 2016. 

With demand currently so high, if you do come across the perfect property or piece of land, you’ll want to seize the opportunity and snap it up as quickly as possible. Unless you have the money to purchase the land or property outright, you will probably require a farm mortgage for your purchase.

What is an agricultural mortgage?

Agricultural mortgages are designed to help with the purchase of farmland, farm buildings, and other agricultural properties.

Just a few of the property-types that they can be used to purchase include:

  • Working farms
  • Equestrian facilities
  • Country estates
  • Renewable energy sites
  • Other rural businesses

In some instances, you may also be able to use an agricultural mortgage to fund the conversion or expansion of a rural building, purchase assets for business growth, or raise funds to consolidate debts.

Agricultural mortgages work in much the same way as regular mortgages, with lenders usually loaning up to 80% of the value.

How to get an agricultural mortgage

Agricultural mortgages can be acquired from most high street banks, as well as from more specialist rural lenders.

Specialist lenders usually have many years of experience in the agricultural industry and a greater understanding of its challenges and opportunities. 

It’s important to shop around when looking for an agricultural mortgage to ensure that you receive the best advice, support, rates, margins, fees and terms.

If you require financial help in acquiring a mortgage, then a commercial bridging loanmay be the flexible short-term funding solution that you’re looking for.

Get in touch with our team here at Richmond Asset Finance by calling 0113 288 3277 to discuss your requirements and find out more about our commercial bridging loans.

How farmers can overcome cash flow problems

Farmers must brush up on their financial management skills to tackle the industry’s current cash flow crisis.

Falling prices, tight margins and growing debts are all putting farmers at risk of running into serious cash flow problems.

A 2016 study conducted by the Prince’s Countryside Fund found that 49% of surveyed farm businesses were suffering from cash flow problems, and the problem has only intensified since then.

Cash flow is essential to any business’ financial security and ability to invest in new opportunities and grow. Farmers in financial difficulty should act immediately to free up money and resolve cash flow issues.

Review your budgeting– If your farm business is struggling with cash flow then it’s time to sit down and review your budget and financial plan for the year ahead. Cut all non-essential expenditure for the short-term and prioritise expenditure that will generate cash flow.

Chase debtors– If you have outstanding debts owed to you then now is the time to start chasing them. Poor accounts receivable management is one of the biggest causes of cash flow problems. Make sure that you have a process in place to encourage debtors to pay you on time.

Extend repayment periods– If you have loans outstanding then speak with your lenders to see if you can arrange to extend your repayment period to reduce your monthly outgoings.

Liquidate stored crops– Liquidating your stored crops isn’t a decision that should be made lightly, but if you’re in desperate need of an injection of cash it offers a quick way of putting cash in your pocket. This is only a short-term strategy and reserves should be built up again once you are out of immediate financial danger.

Defer large investments– Reign in the spending until you’re confident that your business is out of the danger zone. If you’re having problems with vehicles or machinery, try getting them repaired instead of replacing them until your cash flow is looking healthier.

Explore farm funding options– There are plenty of useful farm fundingsolutions on the market today that can help struggling farms to safely and affordably gain the cash flow they require to grow their business. Farm asset finance can help farmers to afford the new equipment or vehicles they need to work more efficiently, and farm asset refinancing allows farmers to free up money tied up in unused assets.

To find out more about the farm funding solutions available from Richmond Asset Finance, give our team a call on 0113 288 3277.

5 tips for farmers facing financial difficulties

Farmers facing financial challenges should act immediately to identify and resolve problems before they become more serious.

Poor cash flow, falling prices, increased competition and Brexit uncertainty are all causing UK farmers a financial headache.

It is a difficult economic climate for the farming industry and farmers must practice careful financial management, keeping a close eye on their debtors and cash flow to avoid running into serious financial difficulties.

If your farming business is already in distress, it’s important to act quickly to prevent the problem from spiralling. Here are five tips for easing financial pressure. 

Check your cash flow– If your farm business is lacking cash flow it puts you in a precarious financial position and can prevent your business from growing. It’s important to keep accurate and up-to-date records of all income and expenditure and ensure that you always know where you stand with your cash flow at any one time. 

Review your budget– If cash flow is a problem for your farm then it’s time to review your budget and financial plan. Make cutbacks where possible to reduce your costs and improve your margin.

Consider diversifying– More than half of England’s farmers are now successfully diversifying their business. Look for alternative sources of revenue by thinking about ways you can leverage your existing assets. 

Farm asset finance– If your business is struggling or stagnating because you can’t generate the funds to purchase new machinery, vehicles, or other assets, then consider farm asset finance. Asset finance makes the best farming equipment more affordable, helping farmers to boost productivity and reach their full potential.

Farm asset refinance– Unlock the cash that is tied up in unused machinery or vehicles by refinancing them. Refinancing farm equipmentcan help to free up money to ease cash flow problems or fund the purchase of a new asset to increase your efficiency or production rate.

For more information about farm asset finance, or to discuss other funding solutions available, give our team here at Richmond Asset Finance a call on 0113 288 3277.

Using rural lending to diversify into alternative livestock and crops

Rural lending opportunities could help farmers to boost their income by giving them the means to diversify into alternative livestock and crops.

Many farmers are feeling the pinch of increased competition, Brexit uncertainty, and the falling price of milk. In an uncertain economy and a changing industry, diversifying can bring in a valuable source of extra income.

According to Countryfile, over half of the UK’s farmers have now diversified in some form.

Some farmers are choosing to diversify into very different areas like leisure and tourism, which require significant investment to set up.  Diversifying into alternative crops and livestock is less of a jump, uses existing skillsets, and is often more affordable.

Alternative livestock and crop ideas

Here are just a few popular alternative livestock and crop diversification ideas to inspire your new venture.

  • Goat or sheep milk.
  • Quail or duck eggs.
  • Wild boar.
  • Ostriches.
  • Angora rabbit wool.
  • Llama or alpaca wool.
  • Edible flowers or herbs.
  • Pharmaceutical crops.
  • Free-from crops.
  • Pumpkins.
  • Christmas trees.

Rural lending opportunities

For many farmers, diversification is becoming a necessity to stay afloat rather than an option. Whilst diversifying can be daunting, the results can be exciting and rewarding.

For most farmers, taking the plunge and deciding to diversify is aprofitable decision. Some farmers even find that their side-project grows into their main business. However, finding the funds to set it up in the first place can be challenging.

Rural lending opportunities provide farmers with the means to expand and grow their business. Whatever your circumstances, it is worth speaking with a specialist rural lending business like our team here at Richmond Asset Finance to find out more about how our short-term and long-term rural lending servicescan help you to grow your business and income.

To discuss your vision in more detail, receive free help and advice, or find out what rural finance options are available to you, give our team a call on 0113 288 3277.

What effect could a no-deal Brexit have on the farming economy?

As a leaked cabinet letter warns of the chaos a no-deal Brexit could cause, we’ve looked at how it could affect the farming economy.

Earlier this month a leaked letter from cabinet secretary Sir Mark Sedwill warned that a no-deal Brexit could cause a 10% increase in food prices and a devastating UK-only recession worse than that of 2008.

This news came just days after the EU chief negotiator Michel Barnier warned that a no-deal Brexit is becoming more likely “day after day”.

As parliament currently work to try to stave off a no-deal outcome, we’ve looked at how this result could affect the farming economy.

The affects of a no-deal Brexit on the farming economy

Agriculture employs 3.8 million people and generates £113bn for Britain’s economy according to The UK in a Changing Europe. A no-deal Brexit is likely to throw the whole industry into turmoil, not just negatively affecting the farming economy, but Britain’s wider economy too.

Just a few of the potentially devastating effects a no-deal Brexit could have on UK farming include:

  • A ban on the export of animal products from the UK to the EU until the UK is granted approval.
  • Uncertainty over future import/export tariffs.
  • A ban on exporting organic products as the EU will no longer recognise UK organic certification bodies until approval is granted. Organic exports account for around 20% of the dairy industry’s total organic sales.

The process of applying for approval for export is not a quick one and can take months, during which time many farms would suffer significant losses that could put them out of business.

National Farmer’s Union president Minette Batters has warned that “a no-deal Brexit would be disastrous, not only for our farmers but for the public too” and that it should be “avoided at all costs”.

How farm finance products can help farms become more sustainable

The farming industry is under increasing pressure to operate more sustainably. Here’s how farm finance products can help farmers to achieve this goal.

Sustainability, climate change, and animal welfare are all hot topics. As vegan and vegetarian diets grow in popularity, more people are becoming interested in the environmental impact of agriculture, particularly the farming of cattle for beef. 

What is sustainability?

To be sustainable is to look after the environment and renew resources at a rate equal to or in excess of the rate at which you use them. In order to become more sustainable, farmers must adopt environmentally friendly practices and find ways to improve the efficiency of their processes.

Which areas of farming can this be applied to?

When looking at the way you run your farm there are likely to be many areas where you could make improvements to become more efficient and sustainable.

Just a few areas you may identify include:

  • Feeding livestock.
  • Breeding livestock.
  • Manure management.
  • Looking after soil.
  • Tools, tech, and machinery.

Tools and equipment for agricultural sustainability

As well as changing and improving existing processes, farm machinery and equipment play an important role in a farm’s sustainability.

If you are using old or outdated machinery, upgrading could lower your farm’s environmental impact. Modern machinery is often built to be more intelligent and efficient with sustainability in mind.

Just a few sustainability problems that modern machinery can solve include:

  • Machinery that produces fewer emissions.
  • Machinery that consumes less power and uses fewer resources.
  • Machinery that can apply chemicals with greater precision.
  • Micro-sprinklers and drip irrigation technologies to save water.
  • Smart technology like crop sensors and drones to improve efficiency of processes.

Farm finance products to fund sustainability

Adopting modern farm machinery isn’t just about being kinder to the environment, it also makes good business sense. Working smarter and more efficiently will also help to save you time and money, making modern farm machinery and technology an excellent investment for the future.

If you need help financing new farm equipment, then there are a variety of farm finance productson the market to choose from. The farm finance product suitable for you will depend on your current situation. 

Get in touch with our team of specialists here at Richmond Asset Finance for free farm finance help and advice by calling us on 0113 288 3277 to discuss your requirements in more detail.

Agricultural equipment that can help to lower ammonia emissions

Farmers are being encouraged to invest in new agricultural equipment and tools to help them to lower their ammonia emissions.

Particulate matter is a type of airborne pollution made from a mixture of small solid particles and liquid droplets including organic chemicals, dust, and acids.

Particulate matter can be inhaled and has been linked to several health problems as well as damage to wildlife habitats and wild plant species.

Agriculture creates a large amount of ammonia emissions, which play a key part in the formation of particulate matter. Levels of ammonia and particulate matter in the atmosphere are monitored closely by DEFRA.

What causes ammonia emissions?

According to Farmer’s Guardian, around 87% of the UK’s ammonia emissions come from farming activity.

Just some of the agricultural causes of ammonia emissions include:

  • Manure application.
  • Livestock housing.
  • Sewage sludge application.
  • Manure storage.
  • Fertiliser application.
  • Livestock grazing outdoors.

Tackling ammonia emissions

Ammonia emissions from agriculture have been in the spotlight recently after the government launched aClean AirStrategyearlier this year to cut air pollution. 

Farmers are being urged to invest in agricultural equipment and machinery that will help them to reduce their ammonia emissions.

To reduce emissions farmers need to find ways to retain the valuable nitrogen found within manure and slurry and then apply it using low-emission techniques.

Just a few types of agricultural equipment that can be used to lower ammonia emissions include:

  • Covers for slurry tanks and solid manure.
  • Specially designed livestock housing that reduces the amount of slurry exposed to air.
  • Low emission spreaders.

Funding agricultural equipment to lower ammonia emissions

You may be able to receive help and funding towards the costs of agricultural equipment to lower ammonia emissions through government schemes like the Clean AirStrategy, Countryside Stewardship Scheme, and Countryside Productivity Small Grant Scheme.

If you don’t qualify for funding or require further financial help, then Richmond Asset Finance provide a range of farming finance products to help you acquire the agricultural equipment you require. 

To discuss your requirements in more detail, give our team a call on 0113 288 3277.

Why are so many UK farmers choosing to diversify?

In today’s uncertain economic climate, many UK farmers are choosing to diversify their businessto boost their income.

Government figures show that 62% of UK farmers are now diversifying into other business opportunities to top up the income they make from traditional farming.

According to Farming UK, of the 62% of farmers that have diversified, 94% of the schemes have been financially successful.

So, if you’re not yet diversifying, it may be worth doing some research and speaking with an expert about rural financeto find out if you can get some help with financing your diversification scheme.

Why diversify?

With over half of those farmers diversifying reporting that the income from their alternative business has become ‘vital’ or ‘significant’ to their farm, can farmers afford not to diversify?

Key factors that are pushing farmers in the UK to diversify include:

  • Disease in farm animals.
  • Increased competition.
  • Falling price of milk.
  • Subsidies falling away.
  • Brexit uncertainty.

As with any business, it makes sense for farmers to avoid putting all their eggs in one basket (excuse the pun).

With many farmers owning a substantial amount of land, it makes good business sense that they use all land and buildings owned to their full advantage. Diversifying into alternative markets like leisure and tourism and renewable energy allows farmers to boost their income.

Rural finance to aid diversification

To find out if you can apply for rural finance to help with your diversification scheme, get in touch with our team here at Richmond Asset Finance to discuss your plan in more detail.

New technology and machinery that could transform farming

Advancements in technology mean that we could soon see smart farming dominating the agricultural industry.

Farmers are likely to become increasingly reliant on farm machinery finance to help them gain the new machinery and equipment they require to keep pace with technology and stay competitive.

Just a handful of the high-tech agricultural equipment set to automate farmers’ jobs include:

Sensors– Sensors can be used on the land or in machinery and equipment to gather and share information and data. Sensors can be placed in fields to gather data about the condition of the soil, or in machinery to track information about yield or condition of machinery. This information can then be accessed by the farmer from anywhere, allowing them to make the relevant changes necessary to optimise crop growth.

Drones– Drones are already being used by farmers in the US for a variety of tasks including monitoring crops and spraying chemicals.

Driverless tractors– Automated, driverless tractors can operate all day and all night, to get the job done quicker and more efficiently. Future farmers may also be able to link their tractors to sensors and drones, giving them access useful information about the field that they’re working.

Robot pickers– Picking crops is a labour-intensive task which can be completed quicker and more efficiently with the help of robots that work 24/7. Using robot pickers would also significantly reduce labour expenses.

To find avoid getting left behind, find out more about our farm machinery finance options by giving our team a call on 0113 288 3277.

Business diversification ideas for farmers

If you’re ready to join the 62% of UK’s farmers that have diversified from traditional farming, we’ve come up with a few alternative income ideas to inspire you.

With farmers in the UK facing many challenges, diversifying the products and services that they offer is a sensible way of branching out and boosting income.

Many farmers are making better use of the land and buildings that they own, adding new arms to their business that are outside of traditional farming.

Some of the most popular business types that farmers are diversifying into include:

  • Camping and caravan sites.
  • Bed and breakfast.
  • Renewable energy.
  • Petting farm.
  • Cattery or kennels.
  • Farm shop and café.
  • Toddler group or kid’s parties.
  • Riding lessons.
  • Alternative crops/farming.
  • Craft workshops.

According to government figures, UK farms that have diversified bring in an average of £10,400 extra revenue per farm. With these kinds of figures, can you afford not to diversify?

A good place to start, is to assess your existing business and identify any physical resources or skills that you could be making better use of.

Funding for diversification

If you require help funding your diversification project, it’s best to plan and develop your ideas before applying for agricultural finance.

Carrying out thorough research and creating a detailed business plan can help to reassure lenders and get them onboard with your vision.

At Richmond Asset Finance we have over 10 years’ experience helping farmers to gain the agricultural financethey need to grow their businesses. Get in touch to discuss your project in more detail by calling us on 0113 288 3277 to find out if we can help.

3 key things to consider when applying for a farm loan

Thinking about applying for a farm loan? Check that you have prepared this key information first.

At Richmond Asset Finance we aim to make applying for a farm loan as simple, quick and pain-free as possible.

Our farm loans have helped numerous farmers to gain the agricultural assets they need to grow and thrive.

Before applying for a farm loan it’s helpful if you can prepare key information about your business and its plans, to increase your chances of securing finance and speed up the process.

The three key things that lenders will look at when deciding whether to grant finance are:

Business plan– Being prepared is key to securing a farm loan. Having a business plan and financial projections all planned out can help to reassure lenders that you’ve thought things through and get them onboard with your vision.

Creditworthiness– Before applying for finance you should find out how your credit rating is looking. Funders are more likely to invest in businesses that they deem to be less risky, but that’s not to say there won’t still be a financing option for you if your credit rating isn’t great, it’s just best to know where you stand from the start.

Financial information– When applying for a farm loan you will be required to give evidence of your current financial situation. This may include copies of your bank statements, balance sheet, cash flow statement, and details about existing assets.

At Richmond Asset Finance we have over 10 years’ experience helping farmers to successfully secure farm loansto grow their business. We can advise you on everything you need to make your farm loan application successful. Just give our team of experts a call on 0113 288 3277 and we’ll be happy to help.

Looking for Alternative Tractor Finance? Here’s How Farm Finance Can Help

Growing a farm business much like any other business is no easy task if a business lacks the finance to fund growth. For these farms it is almost inevitable that financial help will be required at some point to grow the business.

Tractors are a critical component in the day to day running of a farm and one of its most important pieces of machinery. An unreliable or outdated tractor can impact on productivity and efficiency as well as cost the business money much as the opposite is true if you are purchasing a good, reliable up to date model.

A tractor can cost in excess of £250,000 which is a substantial sum for any business and even standard models can cost in the region of £80,000. So, like any investment decision, buying a tractor will require a careful assessment of the improvements it is likely to bring to the business and how it will impact on the bottom line.

Tractor purchases can be made in the form of lease or HP arrangements that provide farm business with a more flexible way to purchase machinery they need. Even if the business has sufficient finance to purchase these machines outright it, asset finance can still offer flexibility and help protect funds for a rainy day.

Why Is The Machine Finance Market Growing?

Machines are critical to growth in the manufacturing sector but they are often expensive and can eat into business profits without some form of financial help.

Traditionally business owners turn to the bank to provide straightforward business loans to help if there is insufficient cash in the business to purchase machines. Even if there is enough cash to buy a machine, a loan can be a more sensible way to buy equipment particularly if there is risk attached in making large investments as there often is in business. However, business loans from banks also come at a cost and interest rates can be high.

Having multiple loans can also leave a business vulnerable in a downturn and restrict any cash flow available to grow the business. Machine finance is growing in popularity because it unlocks funding when you need it.

So if your business requires a new machine that will cut down the amount of manual labour required to get jobs done such as a CNC machine, machine finance can help you acquire that machinery at a minimum upfront cost.

This means you get the benefit of improved efficiency and profitability while spreading the cost. It can also be tax efficient now that the government has increased the annual investment allowance. So it comes as no surprise that the machine finance sector has grown 9% year on year.

Machine Finance Sector Up 9%

Any thoughts of the manufacturing sector being hit by the uncertainty around Britain leaving the EU Certainly hasn’t been felt in the machinery finance sector where growth has hit 9% compared to the previous year.

Analysts say the UK asset finance market as a whole look set for a record period of growth in 2019 on the back of a broadly stable 2018. Last year saw a mixed pattern of growth in some sectors and declines in others. IT asset finance for example saw a fall of 32% while other sectors such as machinery and business equipment finances saw increases, the latter seeing 8% growth in the same period.

Machinery finance may well see further year on year growth in 2019 if manufacturing receives a boost and more business owners take advantage of the temporary tax benefits that will come as a result of taking advantage of new Annual Investment Allowance limits.

Machine finance can be particularly useful for investing factory machinery such as CNC machines, which can be expensive to purchase outright. Machine finance provides a way of investing in machinery without having to risk huge amounts of money which can be better used in expanding business operations, research end development.

Farmers – Are You Exploiting This Tax Allowance?

It may not be all good news for farmers this year but there is one particular piece of news that every farmer should be aware of and that relates to an opportunity to take advantage of machine purchases with the help of the government.

Farm machinery is often a major purchase with tractors alone costing in excess of £100,000 so if these savings can be offset it has to be good news. Fortunately, the government stepped in to help farmers with a change to the Annual Investment Allowance that will go a long way towards helping farm businesses make some big investments in farm machinery.

The fact that the move isn’t permanent should alert farmers to take advantage before 2021. The AIA threshold was £200,000 in 2018 and this has temporarily risen to £1million for the next 2 years.

With a lot of uncertainty at present and for the future of some farms in the UK this allowance could make a difference. Specialist finance could help ease costs further for farm businesses and enable more investment to improve efficiency and explore new opportunities for farm business development in the future.

If you would like to find out more about farm finance contact one of our advisors today who will be able to help.

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