Agriculture is an essential part of the UK economy. The total agri-food sector in the UK generates around £17 billion. This is a total of gross export earnings. Also, the sector has 3.7 million jobs for people.
Hence, this is considered a valuable industry. But with the value, farmers are facing many challenges. They are facing the challenge of high costs and low profit. Many businesses involved in other sectors are earning more than the farming sector.
At this pace, the farmers may face the risk of rising costs. This is a serious threat to profitability. Further, the costs are expected to rise in the future. The inflation rates in the economy were rising at lightning speed.
As a farmer, if you are buying raw materials, you should always look out for discounts. Many payment methods give you discounts. Also, before purchasing the credit, always look out for discounts on the bill.
If you plan to buy material for your business, look out for bulk buying. Bulk buying will help you to reduce money. Along with this method, you can also look for generic alternatives.
Sometimes we are not aware of these alternatives and spend huge amounts of money on expensive brands. You can always go for other options and save your money. Every kind of raw material has got alternatives with them such as pesticides, fertilizers, chemicals, etc.
Moreover, you can shop for these materials with different suppliers. Do not get a stick on one supplier. Instead, carry out research and contact the best supplier. The suppliers will help you to get the best prices.
If you do not get something from them, you can check the prices online. Online options give you a variety along with cost reduction. Do not make a delay in your critical purchasing. Before the prices spike, buy all the essential things.
As a farmer, you may get loyalty bonuses at many places. Do not forget to take advantage of this opportunity. It will help you to reduce the underlying costs of your inputs.
What is farm finance?
Basically, agricultural finance is an alternative for farmers to fund their agricultural needs. As business owners and farmers, you have to analyze your farming needs.
There may be many things required to buy in your farms such as livestock, new pieces of equipment, land, pesticides etc.
Every business requires cash injection at regular intervals. Farming is no exception. In case of an emergency, you can always borrow farm finance from different lenders.
Farm finance is not a difficult option to procure. It may take a few days to get your finance sanctioned. Although there are many applicants for farm finance, it is easier for you to get if you have strong credentials.
And with this type of boring, it is important to maintain your business plan. You should have a plan as to how to go about with your business. Many assets and liabilities need to be catered to before borrowing.
This type of financing also includes unsecured financing. It is not difficult to get it. You just need to agree on mutual terms and conditions. Also, the lenders may seek the valuation of your business.
This ensures the security of repayment of the loan. If you are an established farmer, you may be looking for a loan with a mortgage. The mortgage helps to secure your loan. Once applied for a loan, you can expect it to get in a few days.
What are the costs of farm finance?
Every farming area and business have their own costs and money involved. But one of the most common elements in form finance is the interest. There is a specific interest rate charged on the funds.
In Ireland, if you are going for same day loans, these rates may vary from lender to lender and from farmer to farmer. There may be certain interest rates charged on it. That totally depends upon your financial condition.
Farm finance may have repayment charges. You need to check with the lenders in case of these repayment charges.
Types of farm finance available
Many types of farm finance are available to you. You have to do proper research to find out your type of finance.
Do not leave any stone unturned. Instead, research for the best means that are available for you. Getting the right deal for you will assure profits in the long run
- Livestock Finance
One of the finance in farm finance is livestock finance. You can buy a dairy cow or any other farm animal with this. This will help you to build your heard. If you want to purchase high Pedigree animals, you can borrow this type of finance.
It helps you to support your farm activities. You may further use this type of finance in purchasing dairy, poultry, beef, Pedigree etc
2. Equipment Finance
Another type of form of finance is equipment finance. On the farms, many types of equipment are required on a daily basis. You have to stay updated with the latest technology. If you do not get the latest one, you may lag behind.
For staying on top, you have to get the latest equipment. Hence, you can borrow equipment finance to fund your needs. Under this, you can have business loans, asset finance and leasing high purchase.
If you are in Ireland, there is another option to borrow, i.e. personal loans with bad credit.
- Asset Finance
Asset finance helps you to purchase a new asset for your business. These are a harvester or a new tractor. You do not have to worry about borrowing these assets for your farm.
You can borrow many things with this type of loan, such as recycling equipment, forestry equipment, renewable energy equipment, plant equipment, business loans etc.
- Business Loans
The next type of loan is a business loan. These loans are of two forms that is an unsecured loan and a secured loan. That totally depends upon your circumstances. You have to analyze your financial condition and the asset valuation.
For example, if you are unemployed but plan to start your own farming business, you require funds to start off your business. You can apply for loans for the unemployed as farm finance in this case.
Also, this will help you to decide the nature of the loan tomorrow. For an unsecured loan, you do not need to have any mortgage, whereas, for a secured loan, you need to have a mortgage for your business.
This means a personal guarantee from your side and makes your loan secure. Also, it is important to pay monthly repayments on time. Do not make delays, as the lenders may blacklist you in the future.
- Lease and Hire Purchase
The last of all is the leasing higher purchase. This is a great option to start your farming business. Also, it is considered as one of the crucial aspects of firm finance. In this, you have fixed monthly payments that you have to pay on time.
Once the property becomes your own, your loan is finished. You have to make the repayments by the time you are on the property. Along with this, you can purchase your machinery by getting a higher purchase.
You can also get vehicles and farm buildings with this type of purchase. Leasing is almost the same as higher purchase. In this, you again pay monthly instalments on time. Like in the higher purchase, you do not own the property in lease.
It can be a good option for you on a short-term basis. As compared to higher purchases, leasing is a more flexible option.
Conclusion
If you are in need of farm finance, analyze your financials accurately. You can easily get farm finance. With the borrowing, make sure to pay it back on time. Also, farm finance is considered a good way to start up and expand your farm business.
Caleb works as a senior content writer at Financealoan for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
