Expert flags alternatives to farm debt

Cash-strapped business have several options to improve their position without increasing borrowing, says Farm Consultancy Group director Charles Holt.

His top tips are:

Treat your bank like any other supplier to get the best deal – perhaps a lower borrowing rate or more at the same rate. Higher borrowings should not be the aim but you may be able to replace some higher cost borrowing with funds at a lower rate.

Approach a different bank – you may not want to move, but banks will fight to keep a good customer and a better offer from a rival may help your case to get lower rates, margins or fees with your existing lender. Above all, present your case professionally and confidently. They are likely to want to see the farm and may need to meet key staff.

Consider asking for a rent reduction or a rent “holiday”. If you don’t ask then you don’t get – the worst they can say is “no”. Try to do this with other tenants of the same landlord to make a stronger case.

Take a closer look at your kit – many farms carry more than they need. What could you sell, share with a neighbour or hire in? If it’s scrap, it has a value too.

Take a step back and view the business as an outsider, or get someone to do this for you. Being caught up in day to day pressures can make it hard to see things clearly – this process could uncover opportunities you and the family may not be have been able to identify.

A substantial cash injection may be achievable using the new relaxed Permitted Development Rights to get planning permission to convert an outlying agricultural building into a dwelling for domestic or commercial use. Think carefully about any possible impact on the operation of the business.

The rules allow buildings that were in agricultural use on 20 March 2013 to get permission for change of use – into a shop, an office or other commercial building or even a residential dwelling, subject to certain planning conditions. With this planning permission, a building can prove to be both far more valuable as well as more attractive to a prospective buyer.

You can let a room in your house and earn up to £4,250/year tax free under the rent-a-room scheme – this is worth considering.

Upcoming webinar


What does the future of farming look like post Covid-19 and Brexit?

Register today

Webinars on demand

Several Farmers Weekly webinars are available to view including topics such as Agribanking, Succession and Tax, OSR yields and more.
Watch now