Is now the time to review your farm finances?

A farmer holds a money bag on the background of plantations

As farms review their finances for 2021, the need for specialist facilities and understanding lenders has never been more important - Credit: Getty Images/iStockphoto

Will Hosegood, associate partner Brooks Leney, explains the finance support available for farms looking to develop and diversify in 2021.

The announcement of the Ag Transition Bill is going to see all of us reviewing our businesses in 2021. The considerations are likely to include Brexit, Covid-19, the weather, the markets and the future of farming and your business along with the need to add value or diversify income streams to adapt for the reduction in BPS income.
Plans could involve building projects, investment in technology, changing processes or simply consolidating long-term debts to make repayments more manageable. Some may even see opportunities to expand their holding or property portfolio.  
The common theme running through all these challenges and opportunities is the requirement for finance and support. The need for specialist facilities and understanding lenders has never been more important. The AMC is in a unique position in providing specialist loans to farms and rural businesses, having done so for more than 90 years, and Brooks Leney is pleased to be one of its lead agents in East Anglia. 
By way of a snapshot, of the applications submitted to the AMC by Brooks Leney so far this year 46% have been for property purchases, 30% have related to refinancing, 9% for improvement works and the remaining for more working capital or specific needs. 

Head and shoulders picture of Will Hosegood, associate partner Brooks Leney

Will Hosegood, associate partner Brooks Leney - Credit: Brooks Leney

Relatively speaking, interest rates are low making the cost of funding more competitive than we have seen in the past 10-20 years. The AMC can offer loans of up to 30 years, on a capital and interest or interest only repayment basis and at fixed or variable rate basis to suit the specific business. 
Length of loan can make a difference to annual cost of borrowing, for example if you were to borrow £250,000 for a 20-year term on a full repayment basis your monthly costs could be £1,400. If you were to extend this through to a 30-year term then the cost could be £1,067, albeit with more interest being paid over the life of the loan. 
Serviceability is key, along with property being offered as security but AMC will consider all income generated on farm, and not just purely from the agricultural enterprise, unlike some high street lenders. 
The AMC’s motto of “Lend and Leave” can often mean that loans can be passed onto the next generation, or certainly enable a business to budget for the life of the loan. 
Brooks Leney combine local knowledge and insights with the AMC’s experience of providing funding support for farming and agricultural businesses, so please do get in touch.