How to Fund Your Farming Business with Bridging Finance

So you have dreamt about starting your own farming business but don’t know where to start. Today we will be looking at how to get started, the pros and cons and most importantly what kind of funding is available to you.

Running a farm is not an easy prospect and it is vital that you understand exactly what you are taking on before you start the process.

Important Things to Consider when Starting a Farm

Before you start you must decide on what kind of farm you will be starting which will be determined by aspects such as weather and location. You will need to be realistic about your options and budget so that you can be sure that you have taken all financial implications into account such as technological investments, employee costs, repairs and maintenance, amongst others.

Demand for what you are farming should be carefully considered and it is vital that there is a market for your produce for your farm to be successful. While the idea of farming may seem an attractive option there are many eventualities that could lead to disaster including floods, drought, market price crashes, operating cost increases and poor crop yield, to name but a few. Investing in effective irrigation systems and water tanks can go along way to tackling some of these issues, however that comes at a price which will need to be factored into the overall costing when looking for funding for your new farm business.

If you are planning to farm livestock you will need to have a good veterinarian with plenty of experience with farm animals. Waste management for livestock farming is also of paramount importance and you will need to stay on top it. Manure can be collected and utilised as fertiliser or can be sold for profit.

The next important thing to consider is what technology will be required for the type of farming you plan to do. Technology may include, but not limited to, machinery, tools, specialist software and livestock tracking devices. It is vital to keep all software up to date in order to get the best out of the technology you will be utilising. It is worth investing in items that will prolong the life of your machinery such as rain covers and sheds.

Knowing your crop well and when to plant is absolutely imperative to being a successful farmer. It also advisable to rotate your crops, as planting the same crop year after year can result in pest and disease issues. Soil conservation is just as important so efficient soil testing will be essential.

Advantages and Disadvantages of Managing Your Own Farm

While starting a farm may be the perfect choice for you, it is worth looking at the pros and cons as running a successful farm can be a lot harder than you may imagine.

Advantages

If you do your research on consumer demand before deciding on whether you are going to be investing in livestock or agricultural farming you will be half way to a profitable future. The demand for farm produce, whether it be fruit, vegetables, meat or wool will always be there making it a potentially very lucrative endeavour. Pricing things up correctly will of course be the key to success as well looking at your competition and marketing yourself and your products effectively.

The opportunity to diversify is also a big advantage when it comes to farming. You will not need to stick to one type of crop or livestock and can mix both should you wish to. Other forms of income can also be looked at such as a petting zoo or a bed and breakfast. These opportunities can potentially generate some further income for you.

Another advantage is the sense of achievement you will experience when farming in a way that gives back to the environment and the local area. You will reap health benefits by being outdoors and as farming is quite a physical job it will go a long way to keeping you fit and in shape.

Disadvantages

As there is always a downside to nearly everything it is advisable to consider these before taking the leap into farming.

One of the main cons is that you will at some point or another have to cope with extreme weather. If the great outdoors is not for you, then it is probably safe to say that nor is the life of a farmer. Early starts, around 5am, is typical so if you are not a morning person then this is not the career for you.

Harsh weather is not only hard for the farmer but can be detrimental for crops, particularly in the winter months. Strong winds, snow and rain can ruin crops especially when it is not the typical weather for the season. With global warming causing unpredictable weather such as extremely high temperatures, droughts and floods, it can be difficult to predict what lies ahead. High winds can also damage farm property such a fences and buildings.

Farming is also extremely hard work and is not for the light hearted. Twelve hour days are typical, and time off can be difficult as farm duties don’t stop. You will need to be physically fit and mentally strong to work in this industry. Hiring staff will alleviate these issues so that you can take a break at times.

Financing your Farm with an Agricultural Bridging Loan

Once you have done your homework and decided that managing a farm is perfect for you, then you will need to work out what funding you will need to get started.

Agricultural bridging finance is available for those looking to start a farming business and are designed to provide short term funding, typically between 1 month to 3 years. As it is a secured loan, the amount you can borrow will depend on the value of the assets you offer up as collateral.

There are many uses for an agricultural bridging loan, including quick land purchasing. As bridging finance can be arranged faster than other types of loans, it is an attractive option for those looking to buy quickly, particularly if you find a fantastic deal that requires you to act fast in order to secure the land.

Short term funding such as bridging finance can also be used to purchase expensive agricultural machinery such as tractors, harvesters, feeding systems etc.

Agricultural bridging loans can also be used for farmers wishing to diversify and move into other areas, for example a zoo or a café, which can be very costly but can be funded with short term finance.

As farming can be somewhat risky due to weather and other external factors, sometimes funds are required to repair, recover and restructure when there has been unexpected issues. Due to the speed an agricultural loan can be arranged, you will be able to get things back on track faster than if you were to take out a more traditional loan product, which will take significantly longer to arrange.

For livestock farmers, existing livestock, which is considered a tangible asset, can be used as security in order to secure a bridging loan to buy more. This gives you the opportunity to expand the business and increase profitability. Agricultural bridging finance is used by the farmers a lot due to the ever changing and often unexpected changes that often occur in this industry when funding is needed fast until longer term loans can be arranged. For this purpose this type of loan product is the best solution, however it is imperative that you consult with a specialist broker who is experienced in this area and can give you all the advice you need and help you to secure the best deal.

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