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Asset finance for the agriculture industry

The UK Farming sector is an integral part of the UK economy as a whole with a total income of £3.7 billion and employing almost 500,000 people*.

At Close Brothers Business Finance we understand the challenges faced by the agricultural sector to drive forward successful and profitable farming businesses and we are committed to offering bespoke agricultural finance solutions to support the industries sustainability.

Whether a small dairy farmer or a large-scale agricultural contractor, we work in partnership with brokers to create a package that will help their customers invest in the assets needed.

*DEFRA report of national statistics ‘Agriculture in the United Kingdom 2015

Typical assets we finance include:

  • Tractors
  • Combine harvesters
  • Farm vehicles
  • Forestry machinery
  • Farm machinery - milking and dairy equipment
  • Live stock - beef and dairy cattle

Our finance products

    Spread the cost over time!

    Hire Purchase enables businesses to acquire an asset while paying for it in instalments over an agreed timescale – the term. At the end of the term, they have the option to purchase the asset outright.

    It lets businesses spread the cost of your investment over the life of the asset, making it easier to budget. Hire Purchase is particularly suitable for acquiring vehicles, machinery, construction and commercial equipment with a resell value.

    Benefits of Hire Purchase

    • More time to repay - Spread the cost over the life of the asset
    • Seasonality - We can structure repayments to take account of seasonal fluctuations in cash flow
    • Keep control - The business is the owner of the asset for tax purposes and can normally claim capital allowances
    • Tax efficient - The business can offset your hire purchase interest and charges against pre-tax profits
    • Reclaim VAT

    When a business needs a cash injection

    Refinancing (Capital Release) is a quick way to access the cash from a businesses assets on their existing balance sheet and use that value elsewhere within their business – for example, to fund a deposit on new equipment or ease cash flow.

    Sale and HP Back is a form of refinance that can be used against most types of equipment, making it suitable for companies of all sizes, including sole traders. It works by us purchasing the asset and financing it back to the business. Repayments are calculated in line with the income stream that will be generated by the asset and at the end of the refinance term, they own the asset.

    This option applies whether they already own the asset or are using it under a finance deal with another provider.

    Benefits of Refinance / Capital Release

    • Efficiency - Uninterrupted use of the asset
    • Spread the cost further - We can take over the finance agreement they have with another provider and extend the term
    • Choice - Give the business a cash injection or use the money to buy other assets that may not be accessible through hire purchase or leasing agreements
    • Make fast decisions - Releasing capital can help the business make faster decisions when negotiating business contracts

    User benefits without the ties of ownership

    Our Finance Lease arrangements let a business use the equipment they need without having to buy it outright.

    They pay us rent for the full use of it. The rental period is flexible and can be tailored to their needs and cash flow. During this period, they will pay us the full cost of the asset, including interest. Then, when you reach the end of the primary lease term they can choose to:

    • Continue to use the asset by entering a secondary rental period
    • Sell the asset and keep a portion of the income from the sale
    • Return it to us

    Benefits of Finance Lease

    • Efficiency - Uninterrupted use of the asset
    • Spread the cost further - We can take over the finance agreement they have with another provider and extend the term
    • Choice - Give your business a cash injection or use the money to buy other assets that may not be accessible through hire purchase or leasing agreements

    Keep all options open

    Similar to a Finance Lease, an Operating Lease allows a business to rent the asset from us while they need it. The key difference between the two is that an Operating Lease is only for part of the asset’s useful life. This means they pay a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement.

    The business get full use of the asset for as long as they need it, without the burden of responsibility of disposing of it or recouping its residual value.

    Benefits of Operating Lease

    • Low initial outlay - Quick access to the asset they need without a heavy upfront investment
    • Freedom - Full use of the asset without having to buy it outright
    • Flexibility - Option to re-rent, purchase or return the asset at the end of the term
    • Pay less - Rental cost is reduced as it is based on a percentage of the original capital cost
    • Off balance sheet funding
    • Reduce costs - Reclaim VAT on rentals

    Renewable energy

    As part of the Government’s pledge to reduce greenhouse-gas emissions by 80% before 2050 in order to help tackle climate change, Close Brothers Business Finance are keen to help agricultural businesses meet the challenge of reducing their carbon footprint, by investing in renewable energy technologies.

    For agricultural businesses looking at ways to cut their energy costs, biomass and wind energy are an affordable option compared to traditional fuel sources.

    By working closely with our Brokers we offer tailor-made funding solutions which are specific to the requirements of their customer, including the refinance of other unencumbered assets to release capital for such purchases.

    Assets funded:

    • Biomass boilers
    • Wind turbines

    We pride ourselves on our speed of our underwriting process and in the majority of cases funds can be available on the same day.  Furthermore we offer flexible terms which include the ability to set up seasonal payments which sit inline with a business income stream, this means businesses can maintain steady cash flow throughout the whole year.

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    As a member of our Broker network you will have a dedicated team on hand to help you serve your customers’ needs.

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