How Does Agriculture Finance Work?

Follow the Richmond Asset Finance guide to financing the running of your farm and how you can use the many forms of agriculture finance to ease the seasonal cash flow challenges.

Agricultural finance comes in many forms. Whether it’s farm start-up loans, getting a loan to buy cattle or farm machinery finance, farmers need access to the funds financing offers. Whatever it is that you and your farm need, Richmond Asset Finance can help.

Financing can also be sought to allow the expansion or diversification of the farm. Your farm may need to purchase agricultural land or extend your property/farm buildings. For this you'll want to explore the different commercial property finance options we provide. You could use this option to fund any of the following:

  • Silos or grain sheds
  • Feed stores
  • Barns and crop storage sheds

Cash flow on a farm can be very seasonal. Large expenditures, whether for machinery, maintenance and improvements or supplies such as seed, feed or livestock, must be made at the beginning of a farming season with income usually generated at the end. There's also no denying that the farming profession comes with its fair share of monthly bills. You may need to make use of agricultural finance to cover a VAT bill or perhaps to re-finance an existing debt. If this relates to you or your farm, feel free to have a look at our working capital finance options today.

How does agriculture finance work?

Farm Loans

Farm loans and financing offer some flexibility in repayment. Some loans repay the principal (the borrowed amount) and interest with every payment. When the final payment is made, nothing is left outstanding.

Interest-only loans require that only the interest is paid during the term. At the end of the term, the principal must be repaid. This allows smaller monthly repayments.

Loans for machinery purchases can use asset financing, where the machinery itself can be used as security. The Annual Investment Allowance provides tax relief in the year of purchase for many types of asset. Asset finance can allow a farmer to move planned purchases forward to take advantage of this relief.

Agricultural mortgages

Agricultural mortgages are the most common loans to enable the purchase of farmland, with the farmland itself securing the loan. Established farms can also use mortgages to obtain needed funds.