Getting a loan for farmers is not as easy as non-farmers in Ireland. Generally, Credit Union and non-bank lenders fund the agricultural needs of Irish farmers, including breeding stock. Although these institutions provide small to medium size loans to farmers, your applications will likely be rejected.
There are a couple of reasons for rejecting their applications, but the most important one is the lack of collateral. Of course, when you need money for breeding stock or buying equipment to facilitate your agricultural needs, you will need to borrow a large amount of money, and for that, it is crucial to arrange collateral.
Insufficient collateral can be a straight reason for the rejection of your application. However, it is not the only reason for the rejection of the application. The existence of previous loans, the risk aversion by the lender, and the lack of financial literacy are some of the reasons why your application is cast aside.
Why may you need to borrow money?
Though there are some planned expenses, you may need to borrow money. Sometimes farmers borrow money because of the unexpected need for money. Uncertainty in agriculture is very common, and this is why farmers often need to borrow money.
However, the demand for funding to invest in the farm has decreased in the last two years. This is because it requires a large amount of money, and sometimes, you do not have collateral to put down. According to surveys, these are the most common reasons why farmers borrow money:
They need money to fund the working capital. Since cash flow is often interrupted while running farms, it becomes challenging to continue meeting with operation overheads. This is why farmers often need to borrow money to fill the gap of working capital.
The cost of energy, labour, fertilizers, pesticides, and insecticides is on the rise. It can take a lot of money to fund the running cost with no rise in profits. This is why farmers are to borrow money to fund their operation overheads.
The other reason why farmers need to borrow money is to invest in their farms. They have to invest in the breeding project, buy machinery and equipment to ease farming. However, new farmers face particular challenges when they have to fund their farms.
Since breeding livestock and equipment require a large amount of money, institutions offer them cash in instalments. Since you cannot get money in a lump sum, meeting all your related needs becomes hard.
Another reason why farmers will need to borrow money is to upgrade their farms. Technologies keep inventing, and they will have to adapt to the latest technology to run their farm smoothly. Some farmers borrow money to invest in the new technology to whittle down the cost and improve efficiency.
Financing options you can seek to improve breeding stock
If you are looking to invest in breeding stock, you can use the following funding sources:
- Farm development loans
Farm development loans are the largest loans. You can borrow up to €60,000 depending on your repaying capacity. These loans can help you borrow money for any purpose, from breeding projects to farm construction work.
The best part of these loans is that they are offered at a fixed interest rate, which means you know how much you have to pay every month to manage monthly payments easily. Whether the base rate goes up or down, the interest rate will be the same.
However, some lenders offer these loans at variable interest rates. It depends on the amount you are borrowing and the policy of the lender. Since these loans come with a large amount of money, you can utilize these funds for the development of your farm.
Breeding stock is also a part of farm development. Of course, you need to invest in breeding from time to time to hit the ground running. You will likely need money to invest in this project, and these loans will probably be the best funding source.
A couple of lenders allow for tailored repayment options like interest-only payments, payment holidays, multiple repayment schedules (monthly, quarterly, more extended repayment period, and the like. However, you should research to know which lender offers customized deals.
- Same day loans in Ireland
Not always you will need to borrow a large amount of money. There are times when you will need a small amount of money for your farm. There can be a lot of unexpected expenses for which you may need to borrow a small amount of money.
In that case, same day loans in Ireland will help you. These are short-term loans, and hence you can get money the same day you put in the application if you prove your repaying capacity. These loans will require you to repay the whole of the debt in one go.
Various lenders offer these loans, but make sure that you choose a lender that provides these loans at a better interest rate. However, some people may have difficulty having a lender sign off on these loans.
This is because of a poor credit score. If you have a bad credit rating, the lender will not approve your application. In that case, you should have one option: to apply for bad credit loans with instant decision in Ireland.
- Farm equipment finance
As the name suggests, these loans help fund equipment or machinery you want to buy for your farm. If you're going to buy any machinery for your farm, you can take out these loans. The amount is certainly more considerable than any other short-term loans,
However, it is crucial to note that you should these loans are not unsecured. The equipment you are financing will act as collateral. You can use the asset, but you cannot gain the title unless you pay back the whole of the debt.
It is important to note that the lender will take back the asset if you fail to pay off the debt on time, so they can cash it out to cover the lost amount. This will also affect your credit rating. Make sure that you borrow money only when you know that you can manage to repay the debt. Otherwise, you will lose your asset.
- Cultivate loans
Cultivate loans are the best loans if you exclusively want to invest in breeding stock. Credit Union generally gives these loans. Applying for these loans is very convenient. However, the Credit Union will take a couple of days to assess your financial condition before signing off on the loan application.
The best part of cultivating loans is that they are completely unsecured, which means you do not have to put down collateral. Therefore, without worrying about losing your asset, you can conveniently apply for these loans.
You can apply for these loans for other large projects. For instance, these loans are suitable for any kind of upgrade in your farm to provide safety to your livestock. This is likely to be a farmer-friendly funding option because the repayment term can be flexible based on your financial condition.
The bottom line
Breeding projects can be expensive. You will need a lot of money to facilitate it. There are various funding sources you can use to fund breeding stock. Some of them are secured, while others are unsecured.
You can also fund your farm with loans from Credit Union or money lenders in Ireland. You should do proper research before opting for any loan.
Make sure that you choose a lender that lends you money at affordable interest rates. Online lenders will be a better choice if you need a small amount of money for instant funding. You can get the cash almost the same day you put in the application.