Specliast lender secures £120m for on-farm loans

A specialist agricultural lender has secured a new £120m funding facility through NatWest Bank and BCI Capital, which could give farmers greater access to competitive lending rates.

Rural Asset Finance, which specialises in fixed-term and fixed-rate finance options for agricultural machinery, equipment and buildings, has facilitated the new fund with backing from the British Business Bank, a government-owned banking enterprise.

The fund is aimed at helping smaller rural businesses expand and diversify with loans and finance options available.

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The British Business Bank has pledged to provide a partial guarantee through its Enable Guarantees programme to lenders, enabling lenders to offer more competitive rates.

A pricing incentive will also be available for loan recipients if sustainability performance targets are met.

Matthew Smart, chief executive at Rural Asset Finance, said:

“This will open up so many more opportunities for agricultural businesses to boost their income with a new source competitive funding, maximise new opportunities and future-proof their business.”

He added that typical five-year fixed rate lending would be offered with a 2% credit margin to good credit covenants.

Mr Smart said: “The British Business Bank’s Enable Guarantee and NatWest’s Sustainably Linked Loan Scheme combined have given Rural Asset Finance a 20% reduction in the credit margin (margin over base rate) otherwise required for wholesale funding facilities of this size.

“Additional pricing incentives are in place to pass through to borrowers where we are facilitating sustainable farming practices and on farm renewable energy generation.”

Unlock capital

NatWest’s relationship director, Matthew Whittle, said the new facility would unlock capital, cut costs, and improve access to competitive finance for rural businesses.

The Enable guarantee programme is designed to encourage banks to increase lending to smaller lenders, with the British Business Bank taking on a portion of the debt risk in return for a fee.

Michael Strevens, managing director of structured financial solutions at the British Business Bank, said partnering with NatWest and BCI Capital boosts funding for non-bank lenders such as Rural Asset Finance, helping smaller businesses access loans.