Farming is one of the most capital-intensive businesses in the UK, yet agricultural finance is one of the most underserved areas of the lending market. High street banks have pulled back from rural lending over the last decade, specialist lenders have taken their place — but navigating that landscape on your own is increasingly difficult.
This guide covers the main finance options available to farms and agricultural businesses in the South West, and the key questions to ask before you apply.
What can agricultural finance be used for?
- Tractors, combines, telehandlers and other machinery
- Livestock purchase — dairy herds, beef cattle, sheep flocks
- Land purchase or improvement
- Farm buildings — grain stores, livestock housing, slurry systems
- Seasonal working capital — inputs, seeds, fertiliser
- Diversification projects — holiday lets, renewable energy, farm shops
Machinery finance
This is the most common type of agricultural finance. Hire purchase and finance lease products allow you to spread the cost of a major purchase over two to seven years, usually at fixed rates. Because the machinery acts as security, lenders can often accommodate businesses with variable income or shorter trading histories.
The current £1m Annual Investment Allowance also makes hire purchase particularly tax-efficient: under hire purchase, you own the asset from day one and can claim AIA in full in the year of purchase. It's worth discussing the tax position with your accountant before deciding between HP and lease.
Livestock finance
Financing livestock is more complex than machinery because the asset is living, breathing, and inherently riskier from a lender's perspective. A smaller number of specialist lenders — including Oxbury Bank and Rural Finance — understand agricultural balance sheets and are comfortable with livestock as part of a broader security package.
Typical terms for livestock finance are 12 to 36 months, aligned with production cycles where possible.
Seasonal working capital
Cash flow in farming is inherently seasonal — costs peak in spring and autumn while income often arrives once or twice a year. Revolving credit facilities and invoice finance (for farms selling to processors or retailers on credit terms) can bridge these gaps without the rigid structure of a term loan.
What lenders look for
- Farm accounts for the last 2-3 years (management accounts accepted for recent years)
- Details of assets, liabilities and existing borrowings
- A clear picture of what the finance is for and how it will be repaid
- Evidence of good herd health or machinery condition where relevant
Why use a specialist broker?
Agricultural lending requires lenders who understand seasonal income, land values, diversification projects, and the specific economics of different farming enterprises. Not all lenders do. Christian Wilcox at GDFS has a background in agriculture and gamekeeping — he understands the sector from the inside and knows which lenders are active and competitive for rural businesses right now.
Call us on 01308 480248 or get in touch online for a free, no-obligation conversation.