From Docks to Development: A £3.75 Million Term Loan to Support Rural Growth
When farming and enterprise intersect, the results for rural growth can be remarkable. At UK Agricultural Finance, we’re often approached by rural business owners with ambitions that span both farming and non-farming commercial interests, and one such borrower in the heart of Scotland exemplified just that.
Working closely with Breadalbane Finance, we recently completed a £3.75 million term loan to refinance existing borrowings, improve cash flow, and provide working capital for future growth. The borrower – a seasoned operator with decades of experience in both farming and commercial operations – had previously borrowed from us in 2024 and returned to us to support the next stage of his business evolution.
A Rural Business Rooted in Scotland
Our borrower is the sole director of a limited company with a rich history. The business was formally incorporated ten years ago, but the individual behind it has been operating in logistics since the late 1990s, initially as a sole trader. What began with small offloading jobs at the local dockyard, just a stone’s throw from the family farm, has grown into a thriving enterprise servicing over 100 boats annually across the UK and Ireland.
With contracts ranging from Wick to Portsmouth and Galway to Glasgow, the business now works with multiple blue-chip clients, who are known internationally. It boasts accreditations including Joscar, FSB, RHA, and Construction Line Gold, and has a strong, experienced management team that allows the borrower to move fluidly between his commercial interests and farming operations.
A Substantial Rural Property Portfolio
Security for the loan consisted of three Scottish farms, comprising over 600 acres in total, and a mix of land uses and income-generating assets. The properties reflect the borrower’s multifaceted approach to rural business:
- Farm 1 is predominantly arable and farmed under a Crop Contracting Agreement with a local arable farmer. It has been in rotation with wheat, oilseed rape, spring crops and potatoes, and includes Designated Agri-Environmental Schemes such as grass margins.
- Farm 2 presents a unique history. Formerly the site of opencast coal mining, it was reclaimed and returned to productive farmland over 35 years ago. Today, it supports a mix of arable, grazing and mature woodland with shelterbelts of broadleaf species, contributing to biodiversity and landscape restoration.
- Farm 3 operates more as a lifestyle property with a DIY livery yard, catering to equestrian users and generating a meagre income.
Across the three farms, the portfolio includes farm cottages, a large farmhouse, various agricultural buildings, and notably, 20 acres of land with development potential. This last point is key to the borrower’s longer-term financial strategy.
Purpose of the Agricultural Loan
The borrower approached UK Agricultural Finance with a view to simplifying an overly complex financial structure and strengthening his business’s financial foundation. At the time of application, the company was servicing multiple commercial loans, including one for £2.6 million and several smaller finance arrangements – all of which added up to nearly £50,000 in monthly repayments.
Our £3.75 million term loan, structured over 84 months at 55% loan-to-value (LTV), allowed him to:
- Repay existing borrowing, consolidating several loans into one manageable facility.
- Release £180,000 in working capital, to support operational liquidity and ongoing investment in both the farms and the business.
- Reduce monthly repayments to £30,000, significantly easing cash flow pressures.
This was a significant win for the business, giving it financial breathing space and a strong platform for growth.
Planning Ahead: Exit and Expansion
The borrower has a clear repayment strategy in place, with two defined routes:
- Development Exit: The borrower has entered discussions with local developers regarding the sale of development land, and early-stage conversations suggest the potential for residential planning consent. If approved, the sale proceeds would be sufficient to repay our loan ahead of term.
- Refinance Exit: Should planning not materialise, the borrower intends to refinance our facility once the company’s financial accounts reflect recent and forecasted growth, improving the profile for potential high-street refinancing.
Alongside this, the borrower continues to invest in his farms – improving infrastructure, upgrading buildings, and enhancing productivity across the holdings. Cattle farming continues in-house, while arable operations are managed through contract farming arrangements.
Understanding the Borrower
One of the key strengths of this case was the borrower himself. He’s run the farming operation for over 15 years, supported by a trusted farm manager, while growing his logistics company into a reputable national business. He is capable, experienced, and supported by a competent management team, all of which gave us strong confidence in the sustainability of both his rural and commercial operations.
This wasn’t the borrower’s first time working with UK Agricultural Finance – we previously supported him with a £980,000 bridging loan in 2024, which was repaid in full just six months after drawdown. That early repayment demonstrated his commitment and reliability, and made us all the more confident in supporting him again.
Affordability: A Nuanced Approach
This deal wasn’t without its challenges. One of the more complex elements was assessing affordability.
- On the basis of historic accounts alone, serviceability of the new loan appeared tight.
- However, after reviewing detailed forecasts, contract documentation, and sales reports, we identified a strong upward trend in income, driven by three newly secured contracts and seven further opportunities in the pipeline.
By evaluating both historical data and forecasted performance, we were able to take a balanced, informed view. We also included appropriate safeguards in our structure, such as profit covenants and dividend restrictions, to ensure the business remains well-capitalised and future-proofed during its next phase of growth.
Why UK Agricultural Finance?
This deal highlights why so many rural entrepreneurs choose to work with UK Agricultural Finance:
- We take a relationship-driven approach. We worked closely with the borrower and his broker, understanding not just the numbers, but the background to both the individual and the business.
- We have the flexibility to structure finance that works for both the business and the land – recognising the interwoven nature of modern rural enterprise.
- We build long-term partnerships. This wasn’t a one-off transaction; it was the continuation of a trusted relationship built over time.
Rural Growth in Summary
This was a complex, high-value loan that allowed our borrower to reduce monthly costs, unlock working capital, and plan confidently for the future. Whether through refinancing, investment in the land, or potential development sales, the business is well-positioned to continue its growth across both agricultural and commercial fronts.
“This was a large, multifaceted deal, but the borrower’s vision and track record gave us confidence. With strong broker support and a robust management team in place, we were pleased to help simplify their financial structure, support growth, and unlock new opportunities across both the commercial and rural sides of their business.”
— Louise Old, Client Relationship Manager, North of England