New bank

[Landrover]

What overdraft size in comparison to wholly owned assets should I expect, looking to change banks mainly because we would like a bigger overdraft facility to cover a diversification project, typical farmers asset rich cash poor, the project will increase cash flow and add value to the farm, od currently just 2% of value of assets TIA

 

[B'o'B]

Why not get a loan?

 

[Landrover]

Don't want to go down the loan route, just finished paying a mortgage on a house and don't want to do that again, been looking to change banks for a while so thought I would kill 2 birds with one stone so to speak

 

[Exfarmer]

I would go for a fixed rate loan, money cannot be cheaper than it is today. Overdrafts come with regular rearrangement charges which can soon make the interest rate look peanuts.
But worth comparing the 2. Remember banks like to look at cash flows and the like before discussing rates and charges

 

[upnortheast]

On a diversification project you will probably find the lenders would prefer you to have a term loan.
Looks better on their books.. & remember an OD is repayable on demand whereas a loan is not. As @Exfarmer says above an OD will have an annual arrangement fee ( maybe 1.25% ) and a loan will only have the initial fee Make sure a loan agreement will allow you to make extra repayments without penalty then if the new project is flying you can clear the loan early
Depends how many £££ involved & the likely pay back time.

 

[Campbell]

The ability to re-pay rather than assets is the new normal in business banking now days.

 

[lazy farmer]

Would also go for a loan in these circumstances. Plus as interest rates are so low paying it off early in the future will not come with penalties

 

[smallholder99]

folk2folk specialize in this type of project

 

[Dman2]

Be far cheaper with a loan