Interest rates are currently at an all-time low, which means if you’ve been thinking about restructuring your finances, there has never been a better time.
As a farmer, landowner or owner of an agricultural business the Agricultural Mortgage Corporation (more commonly known as AMC) is the obvious choice of lender. Although some of the mainstream banks have what they call specialist teams, AMC is the acknowledged expert when it comes to long-term lending for agricultural businesses. Unlike other banks, AMC does not get involved in day-to-day banking, which allows them to focus on what they do best.
At this point, we should declare an interest here. Batcheller Monkhouse is a leading agent and valuer for AMC in the south east region, covering Kent, Surrey, Sussex and Hampshire. We choose to work with the AMC as we believe they genuinely understand rural businesses.
For example, whereas other lenders will insist on constant reviews and press to renegotiate rates every three or five years, AMC follows a ‘lend and leave’ policy: as long as loan repayments come in regularly they are quite happy to let a 30 year loan run its course uninterrupted. Indeed, only the other day one applicant confessed that it was only when he checked his bank statement that he remembered a 20 year loan was still running. We know from our farming clients that being freed from the worry that a loan might suddenly be called in at short notice gives them great peace of mind. There are no annual visits, no compulsory insurance, no annual accounts to produce and no annual review.
AMC also appreciates that farmers value flexibility and offer various types of loans with different terms to suit business needs such as a five-year flexible facility that acts like an overdraft where you don’t pay interest until you draw down on it. This can greatly help with farm cashflow when you typically need to make large purchases of, say, fertiliser but won’t see the crop until nine months’ time.
They are flexible as to who they lend to, whether this is a trust, individual, limited company or partnership. AMC understands the need for a choice of loans which include fixed or variable rates, interest-only or repayment – or even a mix of all of them.
With the average age of a farmer now 59, fairly close to the traditional retirement age, it can be quite difficult to arrange long-term finance from other lenders. However, as the AMC understands the nature of farming as a successional business they are not deterred from lending to a business where the partners may be close to or over the standard retirement age. Standard farming loans with the AMC are transferable between successors of a business, whether a son, daughter or other family member. The loan will not be recalled and, again, this alleviates another potential stress at a time of change in the business.
The AMC periodically receives funding from the European Investment Bank (EIB) earmarked to be made available for farming businesses. These funds are only intended for specific projects such as building new farm buildings, buying more livestock, investing in new machinery and are all aimed at increasing agricultural productivity. This is typically available at a 0.8% discount on standard interest rates.
If you’d like to secure a loan from AMC for any farming purpose, Batcheller Monkhouse can help you with the application process at no cost. We have a high success rate of turning applications into loans and, in fact, were AMC’s leading agent in the south east region over the last twelve months. Applying through us cuts out a stage of the process, which saves you time. All you need to do is sit down with us to run through your proposal and we then take care of the rest, handling all the paperwork and steering you through the process.