Agricultural Finance


A guide to agricultural finance

Maintaining the sizeable contribution that agriculture makes to the economy – as well as meeting dietary needs and feeding people, of course – requires a steady investment in the machinery, equipment and distributive means necessary for a healthy agricultural industry. This, in turn requires access to the funding necessary to meet those needs.

Why you may need agricultural finance

Anything involving the cultivation of the soil – or, for that matter, the extraction of any essential raw materials from the ground – are activities that require in machinery, plant and vehicles that are likely to be high in value.

They are likely to be costly to acquire, but also be put to use over a long period of time and, therefore, have a long payback period.

Finance for the production of agricultural products, their handling and their distribution, together with the needs of activities such as quarry, therefore, relies on a wide array of difference funding solutions.

Types of finance available

There is a wide range of potential methods of finance available, including:

Hire purchase

  • this is perhaps one of the most traditional methods of buying major items and pieces of equipment on credit;
  • you put down a deposit – typically 10% of the price – and make regular monthly payments to complete the purchase;
  • the long term commitment is for the purchase of the items involved, although ownership does not actually pass to you until the final payment is made (and the equipment, machinery or vehicles may be repossessed if you default on the monthly payments);

Finance lease

  • although this is essentially a lease agreement – you do not own the machinery or vehicles, but have exclusive use of them;
  • the lease is typically for the long-term, usually stretching over the working life of the plant or machinery – and its acquisition is normally reflected in the balance sheet of your business;

Operating lease

  • this type of lease, however, is generally for the much shorter term – say, one to five years – with the return of the leased equipment to the lessor at the end of the agreement or effective renewal through the agreement of a new lease;

Why use ACF?

You are busy running an agricultural or quarrying business. One of the last things you may want to worry about, therefore, is the choice between several apparently conflicting finance options and the relative merits of each.

This is where we at ACF Direct come in. We are able to make that assessment on your behalf and have access to all the finance products available for maintaining and expanding your business operations.

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