Written by John Swire
Rob Bishop of Woolley & Wallis Finance advises farmers to take advantage of the current low interest rates to restructure their finances. He says, “With the imminent decline of agricultural subsidies it is critical to utilise the unique ability of farms and estates to secure cheap long term funding and take advantage of the opportunity to make decisions which could help bridge this fall of income and safeguard the future of the farm.”
That Brexit is driving the collapse of the pound Sterling is well documented and as ever in farming has created the upside to commodity prices and a bigger BPS ahead. The weak pound has also brought about a collapse in the value of fixed interest rates. Today, 25 year fixed rates are at record lows and this offers businesses the opportunity to future proof against finance costs. Woolley & Wallis Finance is currently working with clients to secure long term funding at below 3·5%.
One client has recently secured 25-year interest only money against the farm, which they are using to purchase an “off farm” commercial investment property. The yield on the property being purchased is 7%, more than double the client’s cost of finance. For this client the opportunities on the farm were limited and an off farm investment made more sense. As ever location and access etc. are key with other clients looking to use current planning policies to make the same investments on farm.
Recent work undertaken by the Woolley & Wallis Farm & Rural team has played a pivotal part in advising on financial options relating to a number of projects including diversification from the core farming activity into bed & breakfast, pigs or poultry.
The cost of finance to do this or the risk of it rising in the future has never been less.
As commercial brokers the firm are working with clients who run sizable overdrafts with a raft of annual fees and where appropriate have successfully restructured these into long term loans and used the opportunity to significantly reduce the annual cost of their business finance
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