Since the credit crunch hit in 2008 with the collapse of the American Bank Lehman Brothers loans and credit for small businesses has been limited if not unobtainable. Borrowers were petrified to approach their banks afraid that the bank would think that they had financial difficulties and reduce any existing Loan or overdraft facilities. The Government brought in Project Merlin to alleviate this problem but with lending in the last quarter still below the level agreed with the Government it is unlikely this tight lending criteria will change in the foreseeable future.

Are there any solutions for the hard pressed farmer? Fortunately yes, private finance is available to plug the gap left by the High Street Banks with short terms loans secured over farms and farm land. As these loans are non-status the income profile of the borrower is not such an issue as it is with the banks. However a realistic exit strategy has to be in place to repay the loan at the end of the term. Loans can be for up to 4 years and in some circumstances can be for longer. Interest rates are also flexible, generally from 1.25% but if the loan to value (LTV) is low then the interest rate can also be lower. These short term loans are generally on a first charge basis but can be on a second charge basis if there is enough equity in the property or land. However second charge lending is at a higher rate than first charge loans and the LTVs may not be as high.

Short Term Finance Loans are very fast to arrange with most loans available to draw down within 10 working days. Interest payments can be rolled up and settled when the loan is redeemed; this is dependent upon there being sufficient equity in the property. Loans can be used for any legal purpose and as the loan is secured on property there will be no need for elaborate business plans or lengthy descriptions about the use of funds.