Funding a rural start-up business

During this time of social restriction, we’ve had many enquiries from people reassessing their lifestyles and planning to move to the countryside to start a business. We’ve been impressed by the determination and innovative thinking and delighted to see such optimism.

If you’re thinking about that too, there’s no reason to stop pursuing your plans – the crisis will pass. Interest rates will never be lower, so for people looking to borrow to start a new land-based business there may never be a better time!

Many people are not sure where to look for finance to help turn dreams into reality. And others look but hit brick walls with banks, lenders and/or brokers.

Firstly, there are 2 things to consider:

1. Deposit/Loan to Value

With any property purchase, you will need a sufficient deposit. With any commercial funding, you need a minimum of 30% deposit to purchase a property to satisfy lenders’ Loan to Value (LTV) criteria. Some people will sell a property to raise the deposit, while others have cash already available. Others often receive a parental gift, or parents and children consolidate to live together and run the new business. 

Raising up to 100% of the purchase price of a property could be possible if you can offer additional property as security that is owned by you or a willing third party, such as a family member.

2. Serviceability

Next, you need to consider the ability of your new business to service (repay) your proposed loan. It is good to start with a cashflow forecast to show your vision over three years. This is a good timeframe as your business should be relatively well established by then. Your forecast should show logical assumptions.

We’ve created cash flow templates for different types of businesses:

•  Holiday accommodation, camping or glamping cashflow
•  Kennels and cattery cashflow
•  Rural business cashflow

Once we understand your vision and expected financial performance of your business, we can help you understand how much borrowing the business can afford and help you adapt your plans if necessary.

Other funding – grants etc

With Government support for farming going through large changes, the grants that might be available for farming, forestry, food businesses, and other rural businesses and communities in the future  (such as the Rural Development Programme funding) are yet to be confirmed.

The Business Finance Support Finder is useful for finding other Government grant schemes that may be available.

Other rural funding options could include:

• The Princes Countryside Trust Fund open grant scheme provides grant funding to improve the viability of family farm businesses and to sustain rural communities. 
• The Fresh Start Land Enterprise could provide options to set up a business, enter a joint venture or develop existing family farming businesses. 
• British Wool run a new entrant scheme for people who have kept sheep for less than 5 years and who have not been registered with British Wool before.
• The Henry Plumb Foundation offers a grant of up to £3,000 and mentorship for successful business start-up applicants, usually aged 18-35. 

Any funding pots can be small and localised, and success is not guaranteed. But take time to explore them - and grab any, often short, window of opportunity.