Farm and agricultural finance: the options

Farm finance is any borrowing or funding a farm business uses to buy land, equipment, livestock or inputs, or to bridge the gap between paying costs and being paid. It is not one product. A mortgage on buildings, a tractor on hire purchase and an overdraft for seed and feed are all farm finance, and a single farm often uses several at once.

Farms are unusual to lend to because the money goes out months before it comes back. Seed, feed, fertiliser and labour are paid for in advance, while income arrives at harvest, at sale or on the date a payment lands. That timing is why the right product depends first on what you are paying for.

The main ways to finance a farm are borrowing secured on land or buildings, asset finance for machinery, short-term working capital for the seasonal gap, and, separately, grants. The table sets them side by side.

Many farms use more than one. A land purchase and a combine are very different risks to a lender, and matching the term of the finance to the life of the thing you are buying keeps the repayments manageable.

Finance for land and buildings is normally a longer-term loan secured by a charge over the property, so the lender takes the land or buildings as security. This is the same idea as a commercial mortgage, and our guide to commercial mortgages explains how that borrowing is structured.

If you buy land, tax can be part of the cost. GOV.UK classes agricultural land that is part of a working farm, or used for agricultural reasons, as non-residential for Stamp Duty Land Tax. That affects which rates apply. Because the rules have conditions, ask a solicitor or accountant how they apply to your purchase.

Tractors and farm machinery are usually financed through asset finance, where the machine is the security, so you may not need to pledge land. The two common structures are hire purchase, where you pay in instalments and can own the machine at the end, and leasing, where you hire it without ownership by default. Our explainer on hire purchase covers the first, and the asset finance guide covers the options in full.

Tax is part of the decision. GOV.UK says you can claim capital allowances on plant and machinery you own, including under a hire purchase contract, and that you cannot claim on the interest payments. The Annual Investment Allowance is £1 million for sole traders, partnerships and limited companies. Main-pool writing down allowances fell from 18% to 14% on 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. Our guide to capital allowances goes through the rules.

Farms fund seasonal cash flow with short-term borrowing that matches the gap, such as a working capital loan, a revolving facility or invoice finance, and by planning the gap in a forecast first. The aim is to borrow for the weeks or months between spending and being paid, not for years.

Start with a month-by-month picture of costs and income. Our guide to the cash flow forecast shows how to build one, and the working capital loan article explains the product most often used for the gap.

Include grant and subsidy income only when it is certain. In England, delinked payments replaced the Basic Payment Scheme in 2024 and are due annually from 2024 until 2027, so a forecast that runs beyond 2027 should not assume them.

No. A grant is money for a defined purpose under a scheme's rules, while a loan is borrowing you repay with interest, and grants do not replace the need to plan your finance. Grants also open and close in windows, so they cannot be relied on to be there when you need them.

GOV.UK’s funding page for farmers in England shows how this works in practice. As of October 2026 it lists the Sustainable Farming Incentive 2026 and Capital Grants 2026 as closed for applications, and Countryside Stewardship Higher Tier as opened in September 2025. The Farming Equipment and Technology Fund 2026 offered grants of £1,000 to £25,000 for each of three themes and closed at midday on 12 May 2026.

• Grants are usually paid for a specific item or action, and often after you have bought or done it, so you may need finance to bridge the gap.
• Schemes differ in England, Scotland, Wales and Northern Ireland, because agricultural support is run separately in each. The details above apply to England.
• Our guide to small business grants explains how to check what is open.

Capzy arranges loans and asset finance, not grants, so for grants go to GOV.UK or the body that runs the scheme in your nation.

Yes. Under the Growth Guarantee Scheme, the British Business Bank sets a lower facility cap of £285,000 for businesses in primary production agriculture in scope of the Northern Ireland Protocol, against £1 million for most other sectors in scope. Subsidy limits and previous aid can reduce the amount available. The scheme guarantees part of the loan to the lender, but the borrower stays 100% liable for repayment.

Whether a lender uses the scheme is up to the lender, and any facility is subject to status and lender criteria. Our page on business loans in Northern Ireland covers lending there more widely.

Lenders look at whether the farm can repay from its own income, what security it can offer and how the business has traded. Each lender sets its own criteria, so the same farm can get different answers from different lenders.

• Recent accounts and management figures, and a forecast that covers the loan term.
• Existing borrowing and what it is secured on, including any charge already over the land.
• Whether you own or rent the land. Tenanted land generally cannot be offered as security.
• Your personal credit position, especially for sole traders and partnerships, and whether a director or partner is asked for a personal guarantee.

Our article on personal guarantees explains what signing one means.

Capzy is a credit broker, not a lender, and is paid by the lender. We introduce farm businesses to lenders offering the asset finance, loans and working capital described above and set out what comes back so you can compare it. We do not arrange grants or give tax or legal advice.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. The lender directory shows who offers what.