By Rob Suss, UK Agricultural Finance

THE demand from farmers for short and medium-term capital from alternative sources has increased, mainly due to banks cutting their specialist lending teams during and post the financial crisis.

So where else can farmers go for advice and finance?

In addition to farmers seeking advice from their lawyers and accountants, many work with agricultural consultants who can advise farmers on diversification and often provide the interface to raising the necessary funding.

A good finance business partner is worth its weight in gold.

A good team will work with farmers in assessing need and providing loans to assist farmers to create sustainable businesses, realise diversification opportunities and other opportunities.

Typical loans would support:

* Diversification, to build new businesses

* Purchasing new farmland when additional acreage or a unique property opportunity may come available and often at short notice

* Property finance to develop, renovate or repair property for capital appreciation and income generation

* Renewable energy projects can be a great source of additional income and add real value to under-utilised land on a farm, or even turn waste products into revenue

* Livestock finance to expand their livestock holdings

* Recovery and restructuring is needed when financial pressure is acute, and a facility can provide a window to take control and rationally plan

* Tenant farmers with a right to buy their land

* Generational transfer to help farming families who are looking to transfer their farm to the next generation achieve this.

UK Agricultural Finance (UKAF) is an established rural financial expert, which supports farmers with loans ranging from £100,000 to £10m, with terms from one to seven years and a maximum LTV of 65 per cent.

The organisation recently joined a select group of alternative finance firms on NatWest’s Capital Connections panel, becoming the tenth lender and first industry specialist on the panel.

Ian Burrow, NatWest’s head of agriculture and energy, said: “We are excited to welcome our first specialist industry finance provider to Capital Connections.

“Traditional funding routes are not always the best option for businesses in the rural community.

“They are an ideal partner for us and complement the impressive and innovative range of alternative lenders already on the Capital Connections panel.”

In looking at 2019 and beyond, the uncertainty of Brexit will be a continued key driver for diversification in the agricultural community with an increase in the rural community looking at strategies as a way to buffer the potential change in subsidies.

A recent case study illustrates where UK Agricultural Finance recently completed a complex £1.2 million bridge loan in the North East to assist a farmer acquiring almost 500 acres of neighbouring farmland and buildings.

UKAF worked with the borrower’s accountants, who presented an excellent case for the borrower, as the farmer required finance to buy the land, but wanted the ability to quickly sell some land for residential development, convert many of the outbuildings for residential use and then sell them, in addition to parcelling up some of the land into smaller lots to sell on at an attractive price to other neighbours, to reduce his loan.

With more than a dozen different titles plus outstanding Section 106 commitments, the farmer required a sophisticated but pragmatic lender, that could work with him to realistic assess the value of the farmland and ensure he secured the finance needed.

Fortunately, UKAF is one of the few specialist lenders in the UK able to provide short and medium-term finance to farmers and their expertise ensured the farmer secured a high-quality bridge loan at an attractive interest rate significantly lower than the market norm.

Louise Old, head of business development for the North East at UKAF, said: “Working within a specialist rural and agricultural team that prides itself on face to face underwriting allows us the time to meet farmers and understand the nuances of the particular opportunity to provide responsible, informed underwriting decisions.”

The future of our farming landscape is yet to become clear and farmers will need advice as they look to introduce new revenue streams and underpin their existing farming enterprise.

Sustainability is a key word, not only for our countryside but for farmers and their supply chains as many hundreds of thousands of people rely on the industry to make a living.

* UK Agricultural Finance is an enthusiastic supporter of farm diversification and supports providing farmers access to capital to diversify, sustain, grow and improve their businesses. Contact the team on 01732 252 399 or