Thank you for joining our webinar, which we were pleased to run in conjunction with the National Federation of Young Farmers Clubs (NFYFC).
we hope you found it interesting and useful.
We would be grateful for any feedback you’d be happy to share with us, as well as any ideas for future topics.
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SLIDES & WEBINAR RECORDING
If you weren’t able to join us, or would like to watch it back, you can access slides and the webinar recording using the links below.
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What percentage of farming businesses in the UK or England have loans/ borrowings?
Unfortunately, we do not have this information available but there has been a steady growth in agricultural lending year on year, as shown in the graph below.
What percentage of loans are rejected? On what grounds are they rejected? (Generally)
We would only have this information available from an AMC’s perspective and not industry-wide which may not be a true reflection. The main reason for applications to be rejected is serviceability of the loan.
I’m tendering for a farm for the first time, I don't own land or property as any security. What finance options are available to me?
Most banks can offer unsecured loans, but the interest rates will be higher than secured loans to take account of the risk involved. Unfortunately, the AMC do not offer unsecured loans.
Are you worried about the reduction of BPS and your customers being able to repay loans?
It certainly is a bigger consideration now when looking at new applications as we can see how the reductions will affect the bottom line of the accounts. AMC do not have annual meetings with their customers unlike other lenders except when issues start to arise. Farmers are innovative and we hope are making plans to mitigate against any impacts.
We have a family run farm and only borrowings are an overdraft. However the overdraft is most of the time mainly used as buying store cattle and finishing them continually. The bank is keen to move most of this to loan to repay however we were keen to expand the amount of cattle on farm, hence the profits would be going into more cattle. Would a fixed interest only loan be better?
It would depend on what your current overdraft interest rate is and what your future plans are. It is important to protect cash flow as the phrase “asset rich, cash poor” often is referred to by farmers. Some businesses would have a core overdraft, being the level that the overdraft does not fall below. Depending on rates, it may be more economic to move this core element onto a loan and keep the overdraft to buy cattle. However, you wouldn’t want the bank to subsequently reduce your overdraft below a point that would facilitate the expansion in cattle numbers. Overdrafts tend to be more expensive than loans, but they serve a purpose if used in the right way.
Has there been an increase or decrease in the number of applications in the Covid period?
AMC had a record year in 2020 but whether it is Covid-related, we are unsure. Parts of the agricultural industry were relatively unaffected by the pandemic whereas other parts were significantly impacted. Bounce back loans offered by the government through banks have generally distorted loan statistics.
GET IN TOUCH
If you’d like more information on the Agricultural Mortgage Corporation (AMC), please feel free to get in touch either with one of the speakers, or your local Carter Jonas AMC agent. You can find all their contact details on our website.