Throughout the agricultural sector, there are a great many farms which stand to benefit from expanding their operations through the purchase of property, whether they are arable farms expanding their acreage or pastoral farms investing in new accommodation for livestock. By investing in their business, farmers can increase their overall income, and generate greater profits; the agricultural sector rewards economies of scale more than many other sectors, so there is a powerful incentive for farms to grow as large as possible.
With expansion being such a key factor to a farm’s success, farmers typically seek to take advantage of new opportunities as they come available, but this is not always possible. Many farmers find that banks are slow to approve finance for agricultural borrowers, as they are reluctant to lend on anything other than a straightforward bricks-and-mortar property. The difficulties of securing finance from the high street banking sector contrast with the highly flexible and adaptable nature of bridging finance, which offers farmers the funding they need at the time they need it.
Bridging finance can be used for a wide variety of purposes, but the most common use is for the purchase of property, a task for which this form of finance is ideally suited. Bridging loans are short-term secured loans which can be obtained extremely quickly, and as such are typically used to seize an opportunity before a long-term source of funding becomes available - they “bridge the gap” while finances are being put in place, hence the name. A common bridging scenario would be for the borrower to take out a loan that covers the initial purchase of real estate, then to seek a mortgage which would repay the bridging loan. This allows the borrower to complete their purchase without seeking a mortgage, which may not be available or appropriate in their situation - mortgages take a long time to put in place, and banks are very fussy about what they lend on.
There are few certainties in the world of farming, where one year can vary wildly from the next. Farmers are subject to a wide variety of external factors; weeks of rain can ruin a crop, while a foot-and-mouth outbreak can destroy a whole herd of livestock. Not only this, but farmers must also contend with the laws of supply and demand, where fluctuating market values can cause the price of their produce to plummet. These many factors make it hard to predict what the coming year will bring, and make it exceptionally difficult for farmers to build up any reserves of capital - there are always a million things which need paying for, and any money left over is usually saved to guard against unforeseen expenses. This is prudent but makes it difficult to invest in a farm’s expansion, because there is no easy way to build up the cash for a purchase or deposit.
This is where bridging finance comes in; when farmers require funding for a project, they need to know they can turn to bridging lenders as a reliable source of finance for any purpose. Bridging finance has numerous advantages over more traditional high street banks, which allows lenders in this sector to provide exceptional service to their customers:
Bridging finance can be secured against nearly any asset, though is most often secured on real estate. Although not all bridging lenders will accept a second charge security, there are many lenders who will, so farmers have the option of securing the loan against a property which is already under finance; a farmhouse with a mortgage, for example. Borrowers can seek a combination of security types, typically offering a first charge against the property being bought as well as a second charge on another asset.
A borrower’s “exit strategy” will be assessed when they apply for a bridging loan. In many cases, a borrower will seek to repay the loan by refinancing with a mortgage provider or by selling the property - however, with a commercial concern such as a farm, it’s possible to use future profits as an exit strategy. Bridging providers will work with their customers to determine whether their exit strategy is viable or not, and help them to devise a workable plan.
Farmers and landowners need to know that they have a secure and stable form of funding, and agricultural finance is key to establishing a successful farm
A diverse farm is a resilient farm, and farmers benefit from investment in alternate revenue streams - bridging loans are vital to secure expansion.
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Farmers need a flexible source of funding that can help them grow and bridging loans for agricultural livestock finance are an ideal solution
Expanding a farm’s real estate is important and helps generate agricultural expansion. Bridging loans are useful for financing property purchases
It can be tough for farmers to raise capital in order to purchase new land, but agricultural finance lenders can arrange flexible solutions.
Agriculture is an unpredictable business which can have good and bad years. Recovery and restructure finance helps farmers get back on their feet when necessary
Investing in renewable energy generates income from farmers land with minimal effort, and bridging finance is available to help farmers go green.
Farmers with the option to purchase their land may struggle to raise the necessary capital; fast and flexible bridging finance can help to make this possible
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