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The NCF Blog

Category: Farming Finance

Given what might be happening in a few months, diversifying is back on the agenda for farmers with unused land currently going to waste.

Creating a campsite can provide a profitable new business opportunity for uk land owners.

Camping is undergoing a revival, and with more people looking to ‘stay in the UK’, holidays and short breaks in the great outdoors are set to skyrocket. This offers vast opportunities for rural farms, which are often well located for a range of target camping markets.

Nationwide has a long history of Financing within the Agricultural Sector and you’ll find us friendly and open to exploring the opportunity with you to “make it happen”.

Choosing Your Target Market

The camping market is surprisingly broad and you can differentiate yourself by providing a clear offer. You might, for example, want to provide a family-only campsite with a cooked breakfast on offer and a farm-hand experience for children. You might simply want to offer electrical hook-ups and camping space to local walkers. You might even want to break into the luxury camping market by setting up ‘glamping’ tents or yurts.

You could invest in eco-pods for walkers and sportspeople.

Refining Your Offer

Think about what will make your farm stand out. For example, a high-spec toilet block can be a huge draw for women and families. You can obtain specialist asset finance to create the facilities that you’ll need to effectively market your offer. You might also want to invest in outdoor cooking facilities or a communal kitchen. Think about whether there are local stores and supermarkets. If not, you might want to provide home-grown food and local produce for your guests. You might also want to upgrade to offering motor-home hook-ups and even studios or log cabins.

We even partner with Farmers selling holiday homes by providing finance for their clients running it as a business, especially where loans are not possible by some other method.

Depending on your ambitions, good asset finance can make all the difference in extending your business plan further.

Practical Considerations

Contact your local council for advice about health and safety regulations and other information on rates and business set-up advice. Your council may also be able to offer a local camping accreditation scheme and advice on marketing your business effectively.

Marketing

Remember to invest in digital marketing by creating a website and also making use of social media channels to promote your campsite to prospective visitors.

Ensure that it is listed in relevant directories and holiday brochures and promote it locally by using notice boards and flyers. Consider buying advertising space in holiday magazines and travel publications and even look into investing in Google Adwords targeted online advertising to reach your audience. Think about all possible options you might want to advertise in a specialist running magazine if a long-distance race occurs near your farm, for example.

Find out if you are eligible for Business Finance

Or, call us today on 01234 240 155 and we’ll do our best to help you.

As a farmer you probably already know all too well the benefits of producing renewable energy on your farm. Not only can you power your own farming activities with the right setup, before 31 March 2019 you could produce a substantial surplus and sell it back to the grid to claw back the investment and make money.

However, the Government announced it wanted to end the generation part of the feed-in tariff in March 2019. And so they did, announcing that from 31 March 2019 you can no longer sell your renewable energy surplus back to the grid unless you are already registered for the FIT scheme. This means the only benefit now to renewable investment in most cases is being self-sufficient. Reason enough for most.

The biggest challenge in developing renewable energy infrastructure on a farm now then is investing in what works. You of course want to invest right away in the technologies that yield the best return and with sun, wind, farm by-products and energy crops to choose from, it ain’t a walk in the park choosing. Two technologies stand out – solar and anaerobic digestion – because they are suitable for most farms.

Solar

Farmers have been harnessing the power of the sun for decades. Small solar panel setups have been used to grow and feed crops and power the lighting in indoor pens since the 1960s. But the development of the technology means it is now more affordable and efficient than ever. You can have panels and modules stretching for acres that can transform a traditional farm into a solar farm.

When not mounted on the ground, solar panels are mounted on rooftops. Farms with masses of indoor space can mount solar panels on rooftops to maximise renewable energy production. Because you can place solar panels on buildings and land every farm can benefit from the technology no matter its size.

Anaerobic digestion

If you want to make better use of the massive waste your farm produces, anaerobic digestion (AD) controls the breakdown of organic materials in a digester. The result of which is a methane-rich biogas which can be burned to produce electricity or heat or to create biofertilizer. You can digest manure, slurry, maize, other energy crops, by-products of food production and biodegradable household waste.

Anaerobic digestion is considered environmentally-friendly because it accelerates the degradation of organic materials. Rather than leaving waste to decay in the open air you accelerate the process and contain the methane it creates. Methane contributes to global warming so any technology that catches it is good.

Financing the investment

Solar and AD can yield more than enough energy to power your farm activities with a surplus. Expect to pay £50,000 per quarter acre for solar and up to £20,000 for anaerobic digesters. To create a megawatt size solar farm you will need five acres approximately. The best finance for solar panels and other renewable energies is commercial finance. This will put a lump sum in your account.

Whatever new agriculture equipment you need for farming, be it a new tractor or chisel plow, there’s no getting away from how expensive it is. It’s always the case with agriculture equipment that you end up paying more for the best stuff too.

Thankfully, you can have the best equipment for your farm – and it won’t necessarily cost you thousands of pounds upfront. All you’ve to do is finance the new agriculture equipment you need with a specialist lender on a Hire Purchase agreement.

Hire Purchase agreement?

A Hire Purchase agreement is a type of borrowing where the lender purchases equipment for you and you pay the lender back in monthly instalments until you have paid off the amount in full. The lender owns the equipment during the repayment period, so you effectively ‘hire’ it from them. Once you have paid off the amount owed in full, ownership of the equipment passes to you. You are then free to do as you please with it.

Financing agriculture equipment is a smart move, especially with interest rates being as low as they are right now. A Hire Purchase agreement suits many farmers because full ownership of the equipment being financed passes to them once the total finance balance is paid back. Costs can then be recouped by selling the equipment or the farmer can keep hold of it and run it until it reaches the end of its life.

The benefits of Hire Purchase agreement for farmers

In addition to the advantages highlighted above, farmers can enjoy the following benefits with a Hire Purchase agreement through us:

  1. Fixed term: With a Hire Purchase agreement you get to choose the term you borrow over. You can borrow over 1-5 years.
  2. Fixed rate of interest: Your agreement will include a fixed rate of interest. For example, our interest rates start from 3.6%.
  3. Easy to budget for: Because your agreement has a fixed rate of interest, all your monthly repayments will be the same. This makes budgeting for them much easier.
  4. No early settlement fee: If you want to pay off the equipment you’ve financed early, that’s fine with us. We won’t charge you an early settlement fee.
  5. Early repayments are no problem: If you want to pay off more of your balance to reduce the finance term, that’s also fine. We’re flexible to suit you.

What if I have already financed equipment with you?

If you have existing equipment financed with us on a Hire Purchase agreement, you can consolidate your existing finance agreements into a larger one. This will release additional funds and give you the ability to buy the new equipment you need. This is called refinance and it’s the quickest way for farmers to raise capital. Commercial equipment refinancing can also be 100 per cent tax deductible if it’s setup in the correct way.

Call us today on 01234 240155 to discuss finance solutions for agriculture equipment or complete our easy application form to get started.

Owning a business in agriculture brings with it big overheads. Building up a herd or buying more machinery is expensive business, and the funds to do these things are not always forthcoming.

Most businesses will look to finance investment in future projects but of course agriculture faces its own special challenges, so where should you look for finance and how do you go about making sure you submit a successful application?

The obvious place is to go to secure funding is one of the big high street banks but that can be a time-consuming mistake. People often report that they feel the application process is too rigid in its approach and doesn’t take account of the special circumstances that exist in the agricultural sector.

Instead it is probably better to look for a specialist agricultural and farm finance lender to help you put your plans into practice. They will be able to take time to understand your business, what the plans really mean and how they will enhance your enterprise.

It is important to look for a lender that will be able to offer different forms of structures for the loan especially given the volatile nature of agricultural cashflows so look for lenders offering flexible terms, offset start dates and interest only options.

At the same time, it’s worth looking out for a finance house that can give a quick decision and pay out. There’s no point completing an application if it has to wait weeks to go through a credit committee!

So once you’ve found a lender then how do you make sure that you are in the best shape to get a positive answer for your application?

With any deal it is important to think about what you want to get out of it before you start to negotiate so before you even start the application think about what you need and of course be realistic.

Having an up to date business plan is a really good idea and being able to show how the finance fits into your plans is helpful.  For example, if you are thinking about renovating barns into holiday cottages then you need to be clear about how much it will cost and what impact the finished project will make to the business.

You will need to be able to show how you will be able to make the repayments. Your lender will be looking at affordability and making sure you have enough free cash available to make the instalments. Again, it’s important to be clear about what you need. It’s pointless looking for a loan where payments start immediately but the cashflows from a new plant don’t kick in for six months.

At this point it may be useful to enlist the help of your accountant and make sure you have a current set of management accounts and a future cashflow forecast that you can include in your application.

Agricultural finance can be a much needed boost for a business that is looking to expand or restructure. Finding a suitable, specialist lender can make the whole process so much easier and give you the best chance of success.

One of the best sectors for seeing the positive effect that new machinery can make is agriculture, and for most farmers investment in the future is a way of life.

A new tractor can reduce fuel costs and ploughing time, new processing equipment can decrease staff costs and increase quality so better equipment can often be a no brainer.

The question is, what is the best way to pay for your farm equipment?

Finance for farms

If you are lucky enough to have had a good year, then it is tempting to pay cash straight away and indeed there are benefits to this. You know where you stand, the cost is all paid upfront and it’s quick and easy. However, as the old saying goes- ‘businesses don’t die of lack of profit but from lack of cash’ and in a sector that can be as volatile as farming, keeping a good amount of working capital on hand is a sensible move.

Although there are a lot of downsides to arranging a standard form of loan for a farmer, specialist farm finance presents a viable alternative to either paying cash for new kit or not buying at all. The key to getting proper farm finance is to speak with a specialist lender. They will understand how farms work, what their cashflow looks like and have a keen understanding of the business model.

Companies that provide farm finance will have flexible products that will give the borrower the kind of repayment plans that help to make a loan affordable. They can provide loans across the medium term which is ideal for long lived assets such as tractors or combines and can structure the repayment periods so that they fall at the times when cashflow is best.

Although we are looking at a planned investment it is also true that money can be needed at short notice for emergencies. If we think of a breakdown of a tractor or baler at the most crucial point in the farming year and at a time when cash is at its tightest then having access to speedy funds can be the difference between a successful harvest and a disaster.

Of course, not all farmers are owners and although the high street banks may be reluctant to lend to tenants, farm finance is often designed to be appropriate for many different forms of business owners.

Having a lender that specialises in agriculture is a big plus when the application process is in train. It’s not unusual for the finance house to appoint specific account managers who can guide the borrower through the application and who will get to know the business in depth.

The viability of financing equipment for your farm is enhanced when you realise that the interest is tax deductible, making the cost of the finance a lot less than the headline rate.

Farm finance isn’t confined to the large and obvious items of machinery. Specialist lenders will often lend for new lines such as a poultry set up or for the cash flow impact of seed bills. It is even possible to arrange financing for VAT and tax bills when they fall due.

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