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Agri Finance

The farming sector has a number of characteristics which may be different from other small businesses, mainly:

  • Farming is usually a family business, with the farmer working on a self-employed basis rather than as a company
  • Farming businesses have access to more security as they have a relatively high level of fixed capital in terms of land and farm buildings
  • Farm income has two elements – payment for their produce (which tend to fluctuate with market conditions) and a fixed element in the form of direct payments from the government.

Farmers need to provide different information to the bank when seeking credit:

  • Farm accounts for the past two years and a current list of stock on the farm
  • A farm plan setting out cash flow projections, preferably with a financial professional. A number of organisations provide assistance and templates to farmers in preparing financial statements, including Teagasc and the Irish Farm Accounts Co-operative Society Limited (IFAC)
  • A letter from the Department of Agriculture, Food and the Marine outlining the total Direct Payments to the farmer
  • An indication of family living expenses
  • Information about any off-farm income of the farmer and spouse
  • A Tax Clearance Certificate or a statement from an accountant confirming that tax affairs are up to date
  • Information  regarding other credit sources used such as leasing companies or merchant/co-op credit

As with other businesses, farms would be expected to provide:

  • Details of the purpose of the loan
  • Adequate security.  A business’s existing bank will generally have adequate security in the form of a registered legal charge. Businesses seeking credit from a different bank could potentially use the same statement of security as used for the existing bank
  • If applying to a new bank, businesses will likely be required to provide bank statements for the previous six months

For further guidance on applying for bank credit, please see the Generic Bank Guide for Farm Businesses in Relation to Finance Applications on the Banking & Payments Federation Ireland website.