The Pillars Of A Solid Farm Funding Strategy

by Paul Goldsmith of Highlands Funding


Highlands Funding Paul Goldsmith Financial Consultant


The financial input required to run an agricultural enterprise would make most people reel. I
t’s a complex business that needs large parcels of land, has huge input costs, irregular and unknown revenues and demands costly machinery. 

They’re an expensive beast to run, having cashflow management and finance solutions in place is essential for farmers as they seek to sure up the financial side of the business. 

Whilst there are often complex products and security arrangements that sit behind farm funding solutions, they generally serve one of three purposes;

  1. Core debt
  2. Working capital
  3. Asset finance


Core debt

Core debt will generally be long term in nature and relate to the likes of;

  • Land purchases
  • Capital & infrastructure works
  • Succession settlements
  • Re-capitalising events 


Debt for these long term needs is generally secured against the farm land assets. 

Depending on the borrowing need behind a particular loan, the debt is repaid over a medium to long term, with terms common between 5 and 20 years.

Market rate facilities have proved a very useful loan product, by allowing different parcels of debt with rollover terms aligned to the borrowing need and their cashflow.


Working Capital

The input costs and working capital cycles of a farm are a juggling act. 

Crops have to be bought, planted, grown, treated, stripped and transported before a cent can be realised, and livestock trades under the same principles. 

Most commonly, the structure of a farm debt will allow sufficient land equity to secure the farms working capital facilities. That said, specific securities over a crop or alternate assets can potentially be used. 

Overdraft facilities are a common working capital solution for those with reasonably simple funding needs coupled with sufficient land collateral to secure the debt. 

For larger and more complex operations, a Market Rate Facility provides the flexibility and features for farmers to draw on portions of debt for a specific purpose, whilst matching cashflow and repayment to the initial borrowing need.


Asset Finance

Your common agricultural enterprise will carry millions of dollars worth of machinery...tractors, trucks, sheep yards, trailers, utes, headers, chaser bins, spray rigs, silo’s you name it. And if they don’t own it they need a contractor who does. Not only is it a large cost of doing business, it’s one that brings with it maintenance costs and the need for an ongoing capital replacement plan.

The asset finance needs of farmers are broad. Some equipment has a long useful life, some will be second hand, some may be custom made. These requirements bring with them a need for specialised asset finance solutions that generally requires the guidance of a broker. 

An asset finance  ‘master agreement’ is one way to give your enterprise ultimate flexibility to purchase the assets needed with ease and certainly, whereby a borrower has a pre-approved limit to purchase certain types of assets. 

Should you need help with any aspect of financing your agricultural enterprise, please get in touch with us at Highlands Funding on 1300 207 881.  


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Based in the Southern Highlands, Highlands Funding provides clients with suitable and cost-effective financial solutions to suit all sorts of lifestyle requirements. If you're a property investor, home buyer or own your own business, Paul and the Highlands Funding team will take the time to understand your situation, arrange and manage your business and home finance and optimise your financial situation. Paul is super experienced in the world or regional banking, agribusiness, small business and personal finances. Find out more info about Highlands Funding here


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Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.



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