When a farmer is in the market for a new piece of machinery or equipment, they will look at the full range of options available to them, weigh up the pros and cons and go with what they feel is right for them.

Taking a similar approach is a good idea when it comes to accessing the finance to fund a new tractor, machine or piece of equipment. Different farmers will find themselves in different situations but it’s important to realise there is a range of finance options.

One such alternative option for capital is Close Brothers Commercial Finance, a provider of asset and invoice finance for businesses of all sizes. Both asset and invoice finance are sustainable forms of funding which enable a business to release finance from existing assets.

“We’re industry leaders in invoice and asset finance”, says Adrian Madden, Head of Sales for Close Brothers Commercial Finance in Ireland. “We balance a commitment to innovation with a prudent approach to lending. Asset finance lends itself particularly well to the farming sector as it provides a range of options that can be used to purchase or refinance capital equipment, from tractors to combines and crop sprayers.”

Lending model

Close Brothers’ average asset finance facility size is between €50,000 and €60,000, with a typical repayment period spread over five years. Each facility is tailored to the individual business, creating a more personal style of financing.

The Close Brothers’ model is particularly effective in cases where the incumbent lender may not want further exposure or is seeking a large deposit as high as 25%, which a farmer or buyer may be reluctant to offer. In such a case, Madden says Close Brothers could offer a lower deposit, provided the farmer had an existing asset to release equity on or use unencumbered machinery as additional security.

“The only security we ever require is an existing asset, meaning we can then offer customers 100% finance on a new combine or other piece of machinery,” says Madden.

Refinancing

Another scenario where Close Brothers is prepared to lend is where a farmer has an asset with outstanding finance on it from another lender but would like to refinance.

In this situation, Close Brothers would be prepared to re-finance the asset according to its value, settle the outstanding loan balance with the original lender and release the remaining equity to the farmer.

This allows the farmer to sweat the value of his asset further while keeping their repayments with a single lender. “We also release equity in assets that are free of any lien, this also provides cash for the farmer to use in other areas of the business,” adds Madden.

Foreign invoices

From the perspective of a farmer looking to buy machinery overseas, Close Brothers could be an attractive finance partner as the company is prepared to deal with foreign invoices on assets.

The larger lenders in Ireland are more averse to funding foreign invoice purchases, but it is not an issue for Close Brothers, says Madden. With machinery moving into Ireland from outside markets, particularly Northern Ireland and Britain, being a finance lender able to work around foreign invoices is an advantage.

Farmer lending

According to Madden, Close Brothers’ core hire purchase business is for trucks, plant and construction equipment but lending to farmers is an area in which the business is continually seeking to grow. Close Brothers has been trading in Ireland for nearly five years, having entered the Irish market at the height of the recession.

Although based in London, all lending decisions by Close Brothers for Irish customers are made locally. The group has built a team of 15 specialised sales reps across each area of the country in Ireland since 2011.

“We understand farmers, their industry and their goals”, says Madden. “And what’s more, we can offer them a range of opportunities to grow their businesses beyond the usual loan and overdraft avenues.”

To read the full Agri Finance Focus Supplement click here.