Why are farmers best placed to borrow for build projects?

Project finance in the commercial development sector is often difficult and costly, with annual interest rates well over 10% and strict requirements placed on the borrower. However, farmers are in a unique position of strength when it comes to borrowing for developments and building projects.

This is mainly because there is typically a decent amount of other security, like farmland, and there is often an underlying farm business to service the loan while the project is built.

Agricultural lenders therefore look more favourably on farmers who wish to undertake development than commercial lenders look at property developers.

A number of our clients are involved in development projects, from new houses to diversification, including commercial buildings to let and equestrian enterprises’ says Andrew Troughton at Carver Knowles. ‘With all applications for finance it is crucial to have a well costed and thought through proposal. This includes making sure all the planning consent and conditions are dealt with and there is a competent team to manage the whole project. It is also important that the end use, whether sale, let or occupation, has been considered. A well conceived project will not only have more chance of getting finance, but a lower risk proposal will also attract a better rate of interest. There is no reason why farmers should not be able to take finance at 3-4% compared to non-farming rates of over 10%.’

If you have a project that you wish to discuss in confidence, do not hesitate to contact Andrew Troughton on 01684 853400 or by email andrewtroughton@fts.carverknowles.co.uk