Farming Equipment Finance | Wenham Specialist Finance

What is Farming Equipment Finance?

With high outlays and many unpredictable factors at play, such as weather conditions and market fluctuations, farming is a hard way to make a living. That’s why some lenders offer funding options specially made for the agricultural sector. By financing expensive specialist equipment, they help to relieve pressure on farmers’ cash flow and support them to expand and diversify their activities.

How does farming equipment finance work?

Here’s a quick overview:

Term and Repayment:

Lenders typically offer three options for financing agricultural equipment: hire purchase, finance lease and operating lease. You may also be able to refinance existing assets and release cash to invest back into your business. All these arrangements have a term of three months to five years. Specialist lenders understand that agriculture is cyclical, and they’re often willing to fit repayment schedules around your farm’s cash flow.

Lender Requirements:

As well as the standard credit and security checks, you’ll usually need to provide accounts and income statements for your farm, a balance sheet, a cash flow forecast and any agreements with major customers, such as restaurant chains and supermarkets.

farming equipment finance | Wenham Specialist Finance

What kind of farming equipment finance is available?

If you want to acquire new equipment for your farm, most lenders offer a variety of ways to do it.

Hire Purchase:

With Hire Purchase, the lender buys the equipment on your behalf and creates a repayment plan to fit with your cash flow and budget. Once all the payments are made, you can pay a nominal fee to take ownership of the equipment.

Operating Lease:

An Operating Lease is a fixed-term rental. When the term comes to an end, you have three choices: hand the equipment back to the lender, sell it on and keep a percentage of the proceeds, or continue renting it as before.

Finance Lease:

In Finance Lease arrangements, lenders offer a reduced rental plan based on the predicted future residual value of the equipment. At the end of the rental term, the lender sells the equipment to recoup the remainder. You can either terminate the lease, rent a replacement piece of equipment, or choose an upgrade.

Refinancing:

If you have equity tied up in expensive machinery, many lenders allow you to use it as collateral and release cash to invest back into your farm. This can help you fund a new project, put down a deposit on equipment or premises, or buy assets you aren’t able to finance any other way.