The short answer
Agribusiness finance is lending for farms and farm-related businesses, and its defining feature is timing. Income arrives at harvest, at sale or across a picking season, while costs for seed, fertiliser, fuel, wages and machinery fall across the year. The most common needs are farm machinery, carrying working capital between harvests and refinancing after a poor season. Equipment lenders can offer seasonal repayment schedules, so payments fall due after grain, livestock or produce is sold. Many farms already bank with a major lender that holds security over the land, and specialist asset lenders can fund machinery alongside that, because finance used to buy an asset usually ranks first over that asset. Lenders assess results across several seasons, not just the latest. For eligible businesses, the government's Regional Investment Corporation offers concessional loans for buying a farm, investment and drought recovery. FundFox arranges agribusiness finance for business purposes across Australia.
What do farm businesses usually need finance for?
| Need | Common solution |
|---|---|
| Tractors, headers, sprayers and hay gear | Farm machinery finance with seasonal repayments |
| Utes, trucks and trailers | Ute finance, truck finance or trailer finance |
| Inputs and wages before harvest | Seasonal working capital or a line of credit |
| Recovering from drought or a poor season | Bank or concessional government loans, sometimes alongside a short-term facility |
| Buying a neighbouring property or succession | Rural property lending, or an RIC AgriStarter Loan for eligible buyers |
How do lenders handle seasonal income?
Agricultural lenders expect income to be uneven. They look at results across several seasons and want a cash flow budget showing when money comes in and goes out. Machinery can be financed with annual, half-yearly or quarterly repayments timed after harvest or sale. Interest accrues between payments, so the total cost is higher than a monthly schedule, but the timing protects the business through the lean months.
Working with your existing bank
Many farms bank with one major lender holding security over the land and often a general security interest over farm assets. That doesn't always stop you using another lender for machinery. An asset lender registers its interest in the specific machine on the PPSR, and finance used to buy the machine usually takes priority over a general security interest. It's still worth checking your facility agreement, because some require you to tell the bank about new borrowing.
Where do government farm loans fit?
The Regional Investment Corporation is a government lender offering concessional loans to eligible farm businesses and farm-related small businesses. Its products include the AgriStarter Loan for buying or establishing a farm and for succession, the Farm Investment Loan for recovery and productivity, the Drought Loan, and the AgBiz Drought Loan for farm-related small businesses. Applications go directly to the RIC and have their own eligibility rules and timeframes. Equipment finance through FundFox is usually quicker for a single machine, and the two can work side by side.
What do lenders look at for agribusiness?
- Results across seasons, usually two or more years of tax returns or financial statements.
- Enterprise mix: cropping, livestock, horticulture or contracting, and how diversified income is.
- Existing debt and the farm's equity position.
- The asset for machinery deals: hours, age, make and resale.
- Seasonal outlook and how the business has handled poor years.
Example scenario
A family cropping operation needs a larger air seeder and a chaser bin before sowing. Its bank holds security over the farm. The broker arranges hire purchase through a specialist agricultural lender with annual repayments due each January, after harvest payments arrive, without disturbing the bank facility.
Example only. It isn't a real client.
