The big news at the start of the year in the agricultural industry was the launch of the Farming Investment Fund. The £27 million fund provides grants to farmers, growers and foresters so that they can invest in the things they need “to improve productivity and enhance the natural environment”.
Made up of two parts – the Farming Equipment and Technology Fund and the Farming Transformation Fund – the first round of funding for the FETF has now closed.
Will the fund actually help farmers?
While all finance initiatives are welcome in the farming sector, the FETF does come with a few caveats. Firstly, you can only apply for funding towards specific items as outlined in the guidance.
Also, while you can make an application for a grant of up to £25,000, there will be a requirement for you to fund the majority of the cost of the item. You are not permitted to fund your part of the bargain with other UK public funds such as other grants, or via lease or hire purchase.
In other words, you will need to fund the remaining cost of equipment purchased via the initiative with cash in the bank. This could prove difficult for some farming businesses, especially when looking to fund expensive equipment.
What assets can be financed through the fund?
The government is very clear on what items can and can’t be financed via the FETF.
Eligible items include robotic harvesting equipment, autonomous driverless tractors or platforms, advanced ventilation control units, plus fossil fuel powered equipment and equipment which lowers the pH value of slurry.
However, you can’t claim for any costs incurred before the project start date shown in the grant funding agreement. Nor can you use the FTEF grant for any items which you have already had EU or national funding for.
For a full rundown of the eligible and ineligible items, refer to the government website.
What other funding options are available?
The good news for farmers is that they don’t have to rely on the Farming Investment Fund to finance the agricultural equipment they need to improve productivity and grow their farm. Let us look at some of the other ways of securing agricultural equipment funding:
In the asset heavy world of agriculture, it’s often important that multiple lines of credit can be utilised together to ensure that the business has access to all the equipment it needs to function and grow.
Unsecured loans can often sit alongside other forms of funding, as they are not supported by security on assets of the business, which is one of the reasons they might appeal to farmers.
While the prospect of not having to put up any assets is beneficial to a farming business, lenders still find ways of protecting their risk (typically, you will have to pay higher rates of interest on an unsecured loan).
If you go down the route of taking out an unsecured loan, consult with your accountant to find the right solution for your business.
Asset finance for agricultural equipment from Shire Leasing
Agricultural finance is an excellent option for farm owners, as it allows you to acquire new equipment and machinery, while maintaining those cash reserves.
Shire Leasing can provide you with the funding facility for both new and used agricultural machinery and farm equipment. We can fund almost anything business related, from harvest machinery to milking systems.
We can help you acquire the assets and machinery you need to grow your agricultural business through flexible farm finance solutions with tailored repayment options.
The great thing about asset financing is the sheer number of options you have available to you. From seasonal leases (payments matched to align with high/low income seasons) to low-start leases (paying lower rentals for the first three to six months while the new equipment is introduced and increases productivity, before beginning full payments), you can find a solution to match your farm’s cash flow.
Prefer to call? You can contact us on 01827 300 333.