Finance for new and young farmers, starting a farm business without long trading history

Yes, in most cases, though the options and terms available depend on your specific situation. Asset finance, where the equipment itself provides security, is generally more accessible for new farming businesses than unsecured lending, because the lender's primary security is the machine rather than your trading history. A clear business plan, a realistic cashflow forecast, a reasonable deposit of 20 to 30 percent, and evidence of farming knowledge and background will all strengthen your application. We work with lenders who have specific criteria for new entrant farming businesses and are prepared to consider applications on their individual merits.

A guarantor is a third party, usually a parent, established family farmer, or other creditworthy individual, who agrees to meet the finance repayments if you cannot. For new farming businesses without an established credit or trading record, some lenders will require a personal guarantee as a condition of approval. This reduces the lender's risk sufficiently to make an otherwise marginal application viable. If your farming operation is being set up as a limited company, the director's personal guarantee is almost always required by lenders regardless of the company's trading stage.

Several programmes exist. The British Business Bank's Growth Guarantee Scheme provides government-backed guarantees to lenders, making them more willing to lend to businesses, including new farming enterprises, that might otherwise fall outside their normal criteria. The Countryside Stewardship and Sustainable Farming Incentive schemes generate regular government income that specialist lenders can factor into their assessment of a new farm's repayment capacity. In Wales, Farming Connect provides advisory support for new entrants. It is worth taking advice specific to your region and situation, as the landscape changes regularly. We stay current on schemes that affect how lenders view new farming applications.

Asset finance, specifically hire purchase, is typically the most accessible starting point for a new or young farmer. Because the equipment provides security, lenders who offer asset finance to new businesses are taking a more limited risk than an unsecured lender. Starting with a single, well-defined asset purchase and a clear repayment plan, rather than a complex multi-asset or high-value first application, also helps. Once that first facility is in place and payments have been met consistently for 12 to 18 months, your borrowing profile strengthens significantly and subsequent applications become easier to place.

Unsecured business loans for new farming businesses without any trading history are difficult to access through mainstream lenders. Some specialist lenders will consider applications where there is a credible business plan, a personal guarantee from a creditworthy director, and evidence of farming knowledge, but these are not straightforward deals. If you need working capital in the first year, it is worth exploring whether asset finance for your core equipment, combined with a personal arrangement or family support for operating costs, is a more practical route than chasing an unsecured loan. We will give you an honest view of what is realistic rather than encouraging you to apply where you are unlikely to succeed.

Yes. Young and new entrant farmers who are farming rented land under a Farm Business Tenancy are fully eligible for equipment finance, since the finance is secured against the machinery rather than the land. FBT holders do not need to own farmland to access hire purchase or finance lease for tractors, cultivation equipment, livestock handling, or other machinery. We work with a number of lenders familiar with the FBT structure and understand that renting land is the normal route into farming for most new entrants.