Yes, in the UK, the government has a range of programs that are designed to provide financial assistance to farmers and other agricultural developers. Each funding option is designed to support the many different types of operations found throughout agriculture, from environmental conservation, through to assisting farmers with their livestock or harvests.

If you are interested in what the UK government currently has to offer the agricultural sector as of August 2024, then below we will expand on this topic and break down the different types of funding you can contact them about, while also learning about their specific purposes.

Environmental Land Management (ELM) Schemes

This scheme is specifically designed to help create and support sustainable farming practices across the UK, and it is also aimed at environmental conservation. It spans from the active encouragement of adopting sustainable farming methods, to helping secure the necessary capital to purchase equipment to support this movement. Let’s look at their purposes and any criteria:

Sustainable Farming Incentives (SFI):

• Purpose of SFI: This incentive offers farmers payments to adopt sustainable farming practices, with the aims of benefiting overall environmental health and supporting both food and overall farm productivity.
• SFI Grant Value: This will be dependent on the sustainable farming actions you intend to pursue, and the general scale of your land management goals.
• Terms you can expect: SFI agreements typically last from anywhere between 3 and 5 years.

Countryside Stewardship (CS):

• Purpose of CS: A Countryside Stewardship is aimed at foresters and land managers, in addition to farmers, with the aim of improving the state of rural areas. Issues like maintaining biodiversity across rural and farmland, as well as improving water and air quality are amongst the reasons a CS can be applied for.
• CS Grant Value: This will again depend on the overall goals of the stewardship, and can be discussed with the relevant Gov agency.
• Availability of CS: This will depend on the specific intentions of the CS, however most are available year round.

Landscape Recovery Initiatives:

• Purpose: This program is intended to support long term environmental goals that are large in scale and conducted primarily by groups of both farmers and landowners, however it should be noted that this scheme is currently closed. We advise that you make an inquiry regarding landscape recovery if it is your intention to start a recovery project, to see when or if this scheme is due to return.

Capital Items:

• Purpose: This scheme is designed to help farmers and land managers acquire the capital items they need to achieve their goals, whether that be fencing, irrigation or livestock housing, as well as the machinery and equipment needed to complete these tasks.
• Value of Grant: Grant values again will depend on the size of your intended project, however there are benefits for individuals or groups who are already higher tier CS agreement holders.

Farm Investment and Productivity Grants

These types of grants are aimed at helping farmers who are seeking new technology to increase their operational productivity, and includes areas like equipment and infrastructure to help them grow. The following funding options are available in this category:

Slurry Infrastructure Grant (Round2):

• Grant Purpose: As the name suggests, farmers who require funding for slurry management systems can apply.
• Value: This grant is available from £25k to £250k, however if you are looking to secure slurry infrastructure be aware that there is a closing date of 30th september 2024 for invited applicants.

Improving Farm Productivity Grant:

• Grant Purpose: Funding here is intended to support any investments in technological upgrades, including robotic or automatic operational equipment, but also things like solar PV systems that will improve overall green efficiency.
• Value: For farm productivity grants you can access anywhere between £25k to £500k for equipment, and £15k to £150k for solar PV, and this again will all depend on the size and scale of your intended usage. Applications for this grant will also be closed by 31st August 2025.

Farming and Equipment Technology Fund (FETF):

• Purpose of FETF: This funding is aimed at assisting farmers with purchasing the aforementioned equipment and technology. Improvements in areas like farm productivity and slurry management, as well as enhancing animal health and welfare are the intended goals.
• FETF Grant Value: FETF grants are available up to £50k for productivity and slurry items, and up to £25k for animal health and welfare, however it should be noted that this grant is currently closed. As mentioned before, if you are seeking FETF it is worth contacting the relevant government agency to discuss options.

Grants for Environmental and Conservation Efforts

Environment and conservation focuses primarily on improving water and air quality, while reducing flood risks and protecting the biodiversity of both farmlands and rural areas, as ongoing environmental changes have gradually put more and more rural ecosystems at risk. Let’s look at the grants that farmers and other land developers may be able to access to maintain or improve these areas:

Countryside Stewardship (CS) Grants:

• CS Purpose: CS is available for farmers and landowners who are, as mentioned above, working on projects to reduce flood risks and improve water, as well as protect biodiversity and improve air quality, though not necessarily in tandem.
• CS Grant Value: For CS grants, the value will be determined again by the size of the project and the scope of issues that are being addressed. You can expect more aid if you are working on many improvements at once.

Wildlife Initiatives:

• Purpose: Wildlife offers specifically focus on improving biodiversity in both plant and animal life, with focuses on areas like helping pollinators, and the wildlife needed to do that.
• Grant Value: Wildlife grants have a number of variables that the government will consider, and primarily focus on the type of land you intend to develop, whether that be arable, lowland, grazing, or any other.

Animal Health and Welfare Grants

Specifically for the usage of improving the health and welfare of livestock, these grants can help farmers with the investments necessary to achieve these upgrades.

Laying Hen Housing for Health and Welfare Grant:

• Purpose: As suggested by the name, this particular grant is focused on improving hen housing for health and welfare purposes.
• Grant value: Farmers and livestock keepers can access anywhere between £5k and £500k to improve the lives of their pullet and hen housing, though applications for this grant will close on 18th September 2024.

Calf Housing for Health and Welfare Grant:

• Grant Purpose: This grant is intended to help farmers upgrade or replace their current calf housing with modern structures.
• Value: You can expect to be able to access anywhere from £15k to £500k through this grant, however note that applications are due by at least 30th April 2025.

Woodland Creation and Tree Health

Finally we come to grants that are committed to helping the countryside’s woodlands and tree health, and these funds can be used for both through rejuvenation and protection projects. Here are the funding types you can find:

England Woodland Creation Grant (EWCO):

• EWCO Purpose: As suggested, this grant can provide those in the agricultural sector with the funds needed to specifically create new woodland.
• Grant Value: Through an EWCO it is possible to access up to £12.2k per hectare of land, so the larger the scale of your project, the more aid you can expect.
• EWCO Availability: While an EWCO is currently available all year round, be aware that this iteration of the grant will be closing on 1st January 2025, so if you have projects planned beyond that, we advise that you contact your local council to enquire further.

Woodland Creation Planning Grant (WCPG):

• WCPG Purpose: Unlike the EWCO, this grant applies to the preparation of woodlands and the planning that goes into it.
• Grant Value: This grant can supply successful applicants with up to £30.5k per project.

Tree Health Grants:

• Purpose: Tree health grants support the restocking and improvement of woodlands that have been affected by tree health issues, which can include a large variation of problems that will need to be discussed before securing the finance.
• Grant Value: Due to the nature of the grant, any funding will be based on a case by case basis, and will depend on the extent and type of intervention.

In all, the UK government provides an impressive umbrella of grants to businesses and individuals working in the agricultural sector, and actively encourages farmers to explore the opportunities which can both help their own operations, and that of the wider countryside and community. For further information on the UK’s government programs for agriculture, you can directly explore the pages from where this information was accessed for reference:

https://www.gov.uk/guidance/funding-for-farmers#manage-your-land-to-benefit-the-environment

Eligibility requirements for agricultural loans will vary amongst lenders, but no different to most other loan types, will depend most heavily on the business’s credit score and financial history, with evidence of successful long term trading and in most cases a complete business plan to demonstrate your intentions.

Because there are such a wide variety of agricultural loans, and specialised lenders who make niche offers to farmers depending on their needs, we can only discuss the specifics of our own loans and their eligibility criteria, however below, in a more broader scope, we will explain what vital information, as a farmer, you can expect to produce regardless of the lender you approach.

Credit History:

A business credit score in the UK ranges from 0 – 100, and the higher your score is, the more trustworthy your business will be recognised as. Above 80 is considered low risk, and as you go lower, you can expect certain terms such as interest rates to rise as your risk does. A credit history will also demonstrate to a prospective lender how reliable you are at managing your finances and repaying your debts.

For most traditional lenders credit score is the be all and end all marker for their decisions, however for many alternative lenders, and us at Nucleus in particular, we are more interested in looking at the business and the business owner’s history and story as a whole, rather than just judging you on your current numbers, but that said, for any business, it should be a key goal to monitor your credit reports and try to maintain a satisfactory score.

Income and Revenue History:

A farming business’s income history is also another big indicator as to the enterprise’s financial health and ability to repay debt, and to assess this, lenders will want to see a number of documents that can be used to prove both the stability and profitability of your operation. If you have decided you will apply for a loan, and have first discussed the options with your accountant or financial manager, you can expect to provide the following documentation to your prospective lender:

• Tax returns: Farmers will typically want to see your past 3 years of tax returns and they’ll expect to see a consistent income throughout that period.
• Balance sheets: For the same time frame, lenders will want to see balance sheets detailing your farm’s expenses and income.
• Profit and loss statements: P&L will also be used by prospective lenders to assess your assets and liabilities to get a better picture of your risk factor.

Depending on the lender, you may need to provide these documents in digital format via a portal, or if they are an online lender and use open accounting and open banking software, the process can be completed within minutes with your permissions.

A Business Plan

A thorough business plan which explains to your prospective lender exactly how you intend to use your loan, with timeframes and examples of how it will contribute to your growing farm’s success, can go a long way towards building trust and transparency. The more complete you make it, the less doubt you’ll leave in a lender’s mind that their money is going to be used as intended, and your repayment strategy is sound. Once you have acquired your funds, too, having a business plan is a great blueprint to go back to, ensuring you stay on the path to success that you drew out before committing yourself to debt.

Proof of Collateral:

If you are seeking a long term secured loan, chances are that as a farming business you will be securing it against either land or your property, however in some cases you may need to provide proof of other collateral, whether that be machinery or livestock, as this will help reduce your overall risk factor for the lender you approach.

Experience and Qualifications:

Demonstrating your experience can also help when it comes to borrowing for farming businesses, as you will find that lenders are more likely to approve loans for farmers who have a track record of success in their industry, from managing agricultural operations through to successful dairy farming. Giving evidence of a wide range of knowledge and expertise in agricultural practices, as well as your time in the industry, will be beneficial to you, as even if you have less experience but your farm is performing well, it will demonstrate that you are competent and have the potential to continue your successes.

Regulations and legal compliance:

Having proof that your farm is in compliance with all the latest farming regulations and laws will also be important if you are intending to secure a loan, as it eliminates any legal risks or complications that could crop up to affect the farms operations and ability to make money, which then puts the lender at risk. Having the correct documentation on hand and ready in digital format, ready to produce if required, will avoid any hold ups during the assessment process of your loan, and should help avoid any delays to you receiving your funds.

The eligibility requirements for agricultural loans in all are quite varied, and a little more complicated than many other industries. As usual, we advise that you speak in depth to your financial advisor or accountant, and do your due diligence on lenders, so when it comes time for your application you will know exactly what you need, what your lenders criteria are, and what you can expect from their terms and conditions. Taking on debt has its risks, however if you utilise your loan as intended, there is no reason why it won’t help you with the successful growth and expansion of your farming business.

Due to the fact that agricultural loans is an umbrella term encompassing numerous loan types that can be utilised to improve the harvests and livestock, as well as land and property for farmers, you will find that repayment options are typically standard when compared to other business models taking out loans.

There are some unique cases for farmers with specialised loans that address areas like livestock for example, however in most cases, agricultural loans involve the lending being secured in the form of a mortgage on either land or property. Below we’ll discuss the most common repayment models that agricultural businesses will find themselves committed to, as well as discuss our own loan options here at Nucleus, and their repayment conditions.

Mortgage Repayments:

Commercial mortgages are the most common facility type used to secure agricultural loans, and as mentioned, are secured on either agricultural land or property, allowing farmers to use that money to develop their farming business. Depending on the lender, you will find that commercial mortgages typically run for up to 30 years, with the extended time frame allowing for smaller businesses to manage their monthly repayments more comfortably. As with other mortgage products, you can expect to make your repayments on a monthly basis, with either a fixed or variable interest rate depending on the agreement you arrange with your prospective lender. Mortgages are long term commitments and should be seen as an investment in your farm’s future, and to ensure you make the best choice for this commitment, we advise that you speak in depth to your financial advisor or accountant to fully grasp what you can expect once you commit your land or property to this facility.

Finance Leases:

Through finance leasing you can make regular repayments for the usage of essential farm equipment over a fixed period, typically seeing monthly or quarterly payments, though again that will be dependent upon your prospective leasing company’s terms and conditions. For farming businesses that don’t have the upfront capital to secure the necessary machinery, leasing can be a great option, and it also means you can plan your budgeting around the fixed loan repayments. One thing that leasing companies will share in common is that once your lease is finished, you will have a number of options to choose from, typically being that you can either buy the equipment for its remaining residual value, return the equipment, or simply continue leasing. By the time the term ends there may be new technology on the market, or you may be in a good enough financial position to buy the product and no longer have to worry about further periodical repayments.

Livestock Finance:

Due to the nature of livestock loans, whereby funds are granted to support the purchase of animals for breeding or production, be that meat or dairy, you will find that repayments are tied to the lifecycle of those animals. Because of this, lenders typically allow their borrowers to make repayments that align with the income generated from the livestock. This could be anything from volumes of milk production to the maturation of an animal if the purpose of the loan was for breeding, and it means that farmers can make their repayments based on the pay off of their investment. Some lenders may also offer seasonal repayment options due to the seasonal nature of agricultural income, however it is something that would need to be discussed thoroughly with your prospective lender to ensure you are fully aware of their terms before committing.

Hire Purchase Loans:

Hire purchase for equipment is another ideal option for farming businesses without the capital to make a front end investment, and through it, you can hire the equipment you need, then make your regular payments over an agreed period until you have fully paid off the cost of the equipment. Once you have made your final payment the ownership of that equipment is transferred over to you, and you will find that for most lenders, the repayment terms will be fixed, meaning you can again plan financially around the costs of the monthly payments. One added bonus of hire purchase loans is that the equipment serves as its own collateral, and depending on the price, can end up resulting in more favourable interest rates, saving more money in the long term.

Term Loans:

For most businesses term loans are a standard form of borrowing, and depending on the size of the expansion, could well suit a farming business too. Other lenders may have options of up to 25 years for their term loans, however at Nucleus, ours are shorter, running between 3 months to 6 years, and with amounts ranging between 10k to 500k. Term loans are extremely flexible and can be used for almost any business purpose, whether it’s buying equipment, expansion, or even covering unexpected costs and damages, and with fixed monthly repayments, they are predictable enough to be able to plan around.

Revenue Based Loans:

Our revenue based loans are ideal for businesses with fluctuating cash flow, and the weekly repayments will be tied directly to your business’s monthly revenue, so instead of the fixed repayments you can expect from mortgages and other term loans, this facility can help during the slower months and repayments will only increase when your income does. Terms for our revenue based business loan run between 3 and 12 months, and borrowers can access anywhere from 3k to 300k.

Understanding the different repayment options available for your farming business will really come down to doing your due diligence on different lenders, and also speaking to your financial advisor to understand what kind of a loan you need and whether shorter or longer terms would be more suitable for your needs. If either of our own options here at Nucleus are of interest, those being our term loans and revenue based loans, do not hesitate to give us a call and we can discuss your plans for growth and success, and help to figure out what could suit you best.

There are a number of key focus areas in the agricultural sector, and financial products for farmers are abundant, ranging from loans through to government grants. As farms are still businesses, their intentions for loans on one hand will be for typical growth and expansion purposes, however there are also many initiatives in modern agriculture with intents of modernising operations and improving environmental conditions, both for the countryside and livestock.

For these reasons agricultural loans can help farmers improve their operations directly and indirectly quite expansively, and depending on the purpose of the loan, it is typical for them to secure the facility on either their land or premises. To expand on the points above, we can look below at some of the key factors we find farmers seeking loans for, and if you are interested in the agricultural sector, explain how farmers can improve their operations with the use of loans.

Equipment and Technology Investments:

Technology is always innovating, and it means that older equipment, compared to newer products, can end up being a net loss if not invested in. We have heard from farmers in the past of how expansive and demanding their ongoing operations can be, and how a bad season can have a significant sway on their cash flow. It means that in many cases large investments can’t be made without putting a strain on their finances, however agricultural loans can reduce the short term burden for farmers who are looking to invest in new equipment and technology, and the long term benefits are extensive.

By upgrading to more modern technology and equipment, farmers can effectively increase the productivity across their entire farm while reducing their operating costs and achieving better yields. This is achieved through investments into things like modern machinery, or tractors and drones, that make harvesting much more valuable, as well as on site technology such as precision irrigation systems, which use water much more specifically and efficiently, helping to save money and improve your carbon footprint.

Expanding Production Capabilities:

For production expansion, farmers will typically be looking at either acquiring new land or developing and upgrading their facilities, and in either case, you can expect lenders to secure their loans against these acquired items if they are significant. Additional land means more space to grow crops or build new storage facilities, each bringing in larger harvests during the season, and with improved facilities all facets of farm production can be processed faster and more efficiently. For farmers, this again means better yields and a larger market presence, with a loan being the ideal solution to achieve this growth.

Crop Management

Effective methods for crop management will always be important to farmers, as you should want to maximise your seasonal yield while maintaining or improving the quality of your produce. Funding can help in a number of ways when it comes to crops, from seeding to fertilising and even controlling pests, investments in these areas will help generate the best produce to sell, improving your market value and overall brand image.

Improving Sustainability:

Recent years have seen a push for greener and more sustainable initiatives across the agricultural sector, and the right loan can help farmers transition through this period to both meet regulatory requirements, but also improve the overall wellbeing of their farmlands and livestock. Methods like modern crop rotations and conservation tillage have been known to reduce soil erosion and improve soil fertility, leading to lower environmental impacts while allowing farmers to gain better access to markets. This is another case of using a short term loan to improve your farm and make longer term gains in savings and profitability off crop yield.

Marketing and Distribution:

While most farming businesses will have a primary focus towards on-site improvements, there are still a number of other ways to improve their ability to distribute produce and achieve financial growth. Marketing campaigns are used across all industries to promote and increase the sales of goods and services, and this is no exception for the agricultural sector. If you successfully manage to increase your customer base, too, other things such as product packaging and distribution networks may need to be considered to ensure those profit gains are maintained.

Cash Flow Management:

This is another universal factor amongst businesses, however it is still worth noting how the agricultural sector can be affected too, as harvests and yields from both crops and livestock are unavoidably cyclical. Certain loan types, like our own revenue based loan here at Nucleus, can help business owners with fluctuating cash flow throughout the year, providing the working capital that is needed to manage everyday expenses during periods of low income. A loan could be used to purchase important materials and tools such as seeds and fertiliser, or cover the costs of labour during the planting season when cash flow is tight, and once the harvest is successful, repayments can be settled. Keeping on top of your cash flow through well utilised loans can take away any financial stresses through the seasonal downtimes, and allow you to secure the best possible yields.

In all, agricultural loans can help farmers improve their operations across the board, but not only that, they can help to promote their operations through marketing while ensuring they maintain a healthy cash flow to continue those operations indefinitely.