2013-12-16   facebook twitter rss

Ease Cashflow Challenges with Short-Term Loans

With the residual impact of the 2012/13 weather affecting the availability of working capital for many across the country, some farmers should consider short term flexible loans as an alternative to renewing or extending their bank overdraft.

This is the suggestion from Jonathan Allright from AMC, who says that while the Single Farm Payment has now landed in many bank accounts and this year’s good harvest conditions will have been a welcome relief, the legacy of a late fall of snow and delayed spring continues to put pressure on cashflow. “This might be further impacted when January’s tax bill comes in,” he says. “But renegotiating or extending your bank overdraft does not have to be the only possible solution.”

Jonathan Allright

Jonathan Allright

Recent data from Defra shows that farm incomes fell by 29 per cent in 2012/13 and this will be showing in many farm accounts. This could be an important factor for those lenders who operate a risk-based pricing model whereby the lending rate is determined by, amongst other things, the strength of the most recent set of figures. Against this backdrop, now could be the right time to consider other options such as a short term loan says Mr Allright.

AMC has seen an increase in the number of farmers enquiring about its Flexible Facility five-year loan as source of working capital or cash for trading. Some farmers are also finding now a good time to look at re-structuring the whole debt profile of their businesses.

“Most overdrafts are subject to annual margin reviews and renewal fees, which can significantly add to the overall cost of borrowing. Other sources of funding that offer a degree of certainty around the supply and known cost of working capital over a defined period and have flexible repayment terms are proving more attractive.

“As a specialist lender currently celebrating 85 years of providing finance to farmers, AMC appreciates that most farming businesses are fundamentally sound, and by planning well and making some sensible funding decisions now, most of the weather-related financial impacts can be sensibly managed,” he adds.


Related Links
link FAO Calls for Increased Support for Mountain Family Farming
link Superfast Broadband at Rothbury
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link Landowners Need To Be Prepared

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