Farmers are still able to access lending despite the disruption caused by Coronavirus, according to UK Agricultural Finance. “There has been a regular flow of loans – with increasing enquiries in recent months – and unlike other lenders we have been able to remain writing loans with secure funding lines,” explains Rob Suss, co-founder at UKAF.
The ability to lend against agricultural land has enabled flexibility in the challenge of valuing properties during lockdown. “The nature of farmland and buildings make social distancing much easier to maintain. Indeed, some loans are proceeding based on a mix of a Red Book valuation on the land and barns, but an estimate on the farmhouse,” says Mr Suss.
UKAF recently completed a loan of £260,000 for a mixed farm in north England, where the main long-term lender would not offer any flexibility without high penalty charges. The borrowers own a substantial farm with acreage and woodland, tenanted cottages, 400 head of cattle, around 2,000 sheep and a good track record of servicing their debt.
“We designed a loan for 38% Loan to Value (LTV) and persuaded the main lender to release part of their security over a couple of fields for UKAF’s first charge, topped up with a second charge against the remainder of the farm,” explains Mr Suss.
Despite the Covid-19 uncertainty, UKAF has maintained its constructive approach to providing loans. “We are able to do so without changing our lending criteria, since our investors understand the long-term, attractive nature of farming.”