Without stating the obvious, the agricultural sector is currently seeing unprecedented demands on its businesses. Input costs were gradually rising in the early part of 2022, which then suddenly spiked due to the situation in Ukraine. This initially had many farming businesses very concerned as to the impact on their profit levels. The supply chain swiftly recognised this, and most sectors within the industry have seen a marked increase in the sale of their end product.
There is still considerable volatility in both input and outputs, however there is now a wider understanding as to rationale behind these increases. This instability also makes budgeting and cost projections very difficult, with figures sometimes being outdated within 24-hours!! In recent weeks we have seen businesses looking to control what is within their influence, particularly when it comes to finance.
Base rate has increased from 0.25% to 1.25% in the past 4-months, with the Bank of England indicating further increases. The cost of funds to financial institutions has also increased in recent months. Both these factors have resulted in a rise in borrowing rates. As an AMC agent we are now receiving more enquiries regarding long-term fixing of debt or new finance. This provides the borrower the ability to fix the loan (without review) for a period of up to 30-years. This is particularly attractive when you consider the cashflow benefit of stretching the loan over 30 rather than 20 years (up to £1,000 per month for every £750,000 borrowed). This gives greater certainty as to what the monthly commitments are and can make this element of budgeting more clear.
AMC also offer the ability to ‘mix and match’ loan structure, with variable rate and interest only also being viable options to accompany a fixed rate loan. Both offer the applicant the ability to repay capital lump sums, when cashflow allows. Whilst an interest only loan can also lower commitments to make it more affordable.
With the wide range of options available, AMC and us, as agents, are here to help guide you through the process. Please do not hesitate to contact Dan Bowden at Barbers Rural on 01630 692500 or d.bowden@barbers-rural.co.uk.