01
What it funds
Land, a season, stock, plant or infrastructure. The fact everything else follows from.
Rural lending
Eight kinds of rural lending compared properly.
A farm carries several kinds of debt at once, and they do different jobs. Term debt sits against land for decades, a seasonal facility fills and empties with the production year, and livestock and machinery finance sit somewhere between. One page per kind, each covering what it funds, how it is repaid, and where it fits in a farm balance sheet.
Farm term loan
Term debt secured on the land is the largest and longest commitment a farming business carries, and the structure of it decides how much room the rest of the operation has.
Read onRural property finance
Rural property lending starts from how much of the purchase the buyer brings rather than from what the property earns, and that ordering surprises people arriving from residential lending.
Read onFarm succession finance
Succession is a funding problem wrapped around a family problem, and the funding is the easier half. Most succession plans fail on the conversation rather than on the arithmetic.
Read onSeasonal finance
A farming year runs on a facility that fills through the spending months and empties when the income arrives. How deep it goes and whether it clears are the two numbers that describe a farm’s season.
Read onSupplier advance finance
Where a farm supplies a processor or a co-operative on a known schedule, the payments it is entitled to can be advanced against. That is a narrower and cheaper proposition than funding a season generally.
Read onLivestock finance
Livestock is the one form of security that appreciates while it is held, consumes feed to do so, and can be realised in a week. Financing it is unlike financing anything else on a farm.
Read onFarm machinery finance
Machinery on a farm is financed like machinery anywhere else, and it sits in a balance sheet where land and stock are already competing for the same servicing capacity.
Read onIrrigation finance
Irrigation is the largest development most farms undertake, it lifts production for a generation, and it depends on a consent the farm does not own outright.
Read onHow to use these
Two questions narrow eight facilities to two.
A farm carries several kinds of debt at once and they do different jobs. Term debt sits against the land for decades, a seasonal facility fills and empties with the production year, and livestock, machinery and irrigation sit between them with lives of their own. All of it is serviced from one production.
The first question is how long until the thing being funded has paid for itself. An asset producing for decades wants long debt; a season wants a facility that clears annually. Matching the length of the debt to the life of what it funded is close to the whole of good structure, and getting it wrong is the most common error in the sector.
The second is what secures it. Land produces the lowest rate and the largest consequence, livestock is liquid and moves with the season, plant is straightforward and irrigation depends on a consent. What secures a facility determines its price, its size and how a lender behaves when the season goes badly.
Two of the eight are transactions rather than standing facilities. Rural property finance is a purchase and succession finance is a transfer, and both are one-off events with long consequences rather than arrangements a farm runs year to year.
What is on every page
The same seven questions, answered per facility.
Every page in this tier answers the same set, so two facilities can be compared without reading both end to end.
02
What secures it
And what that does to the price, the size and the consequence if the facility fails.
03
How it is repaid
On a schedule, from a season, or from a sale, and whether the timing can be matched to the production year.
04
What a lender assesses
Which differs by facility, and always includes the whole debt position rather than the new item alone.
05
How it behaves in a poor season
Because on a farm the security and the servicing capacity frequently weaken together.
06
The structural error
Every facility has a way it is commonly set up wrongly, and each page names its own.
07
Where it does not fit
Every page says who should be looking at something else, because a page that only sells is not much use.
The honest limit
What this site cannot tell you.
Every rate band on this site is indicative. Nobody publishing a website in New Zealand can say what a particular farm will be charged, because the price depends on land class, production history, equity, security, the operator and a credit assessment, and only the lender sees all of them.
The same applies to what a lender will advance. Equity requirements on rural purchases and advance rates against stock and land vary by lender, by sector and by property, and a page naming a figure would be describing a policy nobody published.
This site is an education site and a calculator. It is not a lender, a broker or a registered financial adviser, and nothing on it is personalised financial advice.
FAQ
Rural finance, the general questions
How many facilities does a farm usually carry?
Several. Term debt on the land, a seasonal facility, frequently a livestock arrangement, and whatever plant and infrastructure debt has accumulated. All are serviced from one production, which is why they are assessed together.
Which facility is cheapest?
Ordinarily the one secured on the land, because the security is strongest. Beyond that the ranking follows what secures each facility rather than any general property of the product.
Can repayments be seasonal?
Frequently, and it has to be asked for because an even schedule is the default. Matching repayments to when income arrives makes more difference to a farm’s year than a small movement in the rate.
What is the most common structural error?
Financing a long asset over a short term. A development that produces nothing for three years financed over five puts most of the repayment before any of the benefit, and it is entirely avoidable.
Does a lender assess each facility separately?
No. Every facility is serviced from the same production, so a lender assesses the total position. That is why an affordable-looking purchase can be declined on a farm already carrying other debt.
Why does security matter more on a farm?
Because on a farm the value of the security and the ability to service frequently weaken together. A drought reduces stock values and production at once, which is the opposite of what security is supposed to do.
How long do rural applications take?
Longer than most business lending, because of the valuation and the volume of information. This site does not publish timings, and a lender will state its own expectation.
Does this site arrange any of these?
No. It is an education site with a calculator and one disclosed referral to Prospa, whose fit on a farm is narrow and is described plainly on the partner page. There is no contact form and no data is collected.