Agricultural Refinance Supports the Next Stage of Growth for a Diversified Farm Business

When circumstances change in farming, the ability to adapt can make the difference between a business continuing to struggle and building something considerably stronger. Sometimes that adaptation requires fresh capital to achieve the desired outcome this is there agricultural refinance can play a significant role. 

For one farming couple in their 30s in the South West, losses associated with an earlier contract calf-rearing enterprise left a legacy of debt. However, rather than continuing with a business model that was no longer working, they changed direction.

Several years later, they have developed a diverse rural business spanning livestock farming, equestrian supplies and services, a successful farm shop and café, with further plans for farm-to-table production, agri-tourism and on-farm accommodation.

UK Agricultural Finance provided an approximately £825,000 agricultural refinance term loan over 84 months, principally to consolidate existing borrowing and provide further capital for the next stage of the businesses’ development.

From Contract Calf Rearing to a Diversified Rural Business

The male borrower has a strong agricultural background, having attended agricultural college before spending several years working as a farm manager in New Zealand.

His partner is a qualified chef with more than 12 years of hospitality experience and now takes responsibility for running the café side of their business.

Their original farming model centred around contract calf rearing. However, declining meat prices combined with a contractor failing to honour agreed purchasing arrangements resulted in substantial trading losses and increasing debt.

The couple made the decision not simply to continue with an increasingly unprofitable operation.

Instead, they converted land back to permanent pasture and began developing alternative income streams that made use of their respective skills, existing assets and local market opportunities.

This ability to adapt has become one of the defining characteristics of the business.

Building Multiple Agricultural and Rural Income Streams

Today, the borrowers operate several complementary enterprises.

An equine supply business has developed into a wider rural operation producing hay, fodder and bedding for local customers. The business also provides horse rug and dog bed cleaning together with tack and equestrian equipment repair services.

This side of the business has grown considerably, with annual revenue now exceeding £500,000.

Alongside it sits the farm itself, comprising approximately 45 acres with modern livestock buildings, a feed store and a substantial concrete yard.

The farm is used for cattle and sheep production, grazing and fodder cropping, but its role within the wider business continues to evolve.

The borrowers are increasingly looking to create a vertically integrated farm-to-table model by producing more of the meat, eggs, fruit and vegetables sold through their farm shop and used within the café.

Beef production is being increased during 2026 in response to strong customer demand for locally produced meat.

A Growing Farm Shop and Café Business

The second major property offered as security accommodates the borrowers’ farm shop and café business.

Occupying approximately 7.5 acres, the site incorporates the main commercial building, customer parking, agricultural land supporting the operation and a children’s play area.

The farm shop and café have become an established part of the wider enterprise, consistently generating annual income in excess of £500,000.

The café particularly benefits from the experience of the female borrower as a qualified chef, while the increasing integration between the farm and hospitality businesses provides further opportunities to strengthen provenance and control more of the supply chain.

UK Agricultural Finance Business Development Manager Sue McIntosh Gibbs visited the borrowers and their businesses as part of the lending process.

The visit confirmed that the various trading activities were operational and that the principal assets were well maintained.

It also provided an opportunity to understand how the different businesses interact in practice, an important consideration when assessing a diversified rural enterprise that cannot necessarily be understood from accounts or property descriptions alone.

Agricultural Refinance to Simplify Existing Borrowing

The approximately £825,000 facility was structured at around 60% loan-to-value and secured by first charges over the borrowers’ properties.

Approximately £600,000 of the proceeds was used to repay existing secured borrowing, with a further approximately £40,000 used to clear hire purchase agreements.

Consolidating these facilities materially simplified the borrowers’ debt position.

The remaining funds provide capital for several investments intended to strengthen the businesses further.

These include approximately £100,000 towards the purchase and installation of a lodge, upgrades to the farm shop’s chilling and freezing facilities, additional stock and working capital.

The lodge will ultimately allow the borrowers to live closer to their businesses, improving day-to-day operational efficiency while removing their existing residential rental cost.

Assessing Agricultural Property on Its Current Merits

The security comprised two separately owned sites, with a field owned by the borrowers’ parents situated between them. The borrowers rent this intervening land.

There had previously also been outline planning permission for a permanent dwelling subject to an Agricultural Occupancy Condition.

That consent had lapsed by the time the facility was assessed.

Although the borrowers intend to seek renewed permission when they are ready to build their own home, no value was attributed to the historic residential planning consent when calculating the approximately 60% LTV.

The lending decision was therefore based on the existing agricultural and commercial assets rather than relying upon potential future development value.

Further Diversification Through Agri-Tourism and Direct Sales

The borrowers are continuing to identify opportunities to grow the businesses.

Increasing the amount of home-produced meat sold through the farm shop is one immediate priority. Greater cattle production will also allow more ingredients used within the café to originate directly from the farm.

Agri-tourism represents another area of potential growth.

Plans include a small campsite together with family-focused visitor activities enabling customers to interact with and feed farm animals.

Importantly, this is not an entirely untested concept.

A visitor experience trialled during the recent lambing season generated encouraging demand, giving the borrowers practical evidence that customers are interested in engaging more closely with the working farm.

Longer-term ambitions include expanding the farm shop and developing a dedicated functions and events space.

Each proposed development builds upon activities, customers and assets that already exist rather than taking the business into an entirely unrelated market.

Lending Based on the Business Behind the Agricultural Assets

Historic trading difficulties formed part of the lending assessment.

However, they were considered alongside what had happened subsequently: the borrowers had responded to an adverse period by changing their business model, creating multiple income streams and rebuilding profitability.

The current enterprises span agriculture, equestrian services, food retail and hospitality, reducing reliance upon any single source of income.

Historic performance indicated satisfactory affordability, with the loan assessment producing a debt service coverage ratio of approximately 170%.

The facility also benefited from substantial property security at approximately 60% LTV.

The borrowers’ intended exit strategy is to refinance onto conventional high-street borrowing within approximately three to five years as leverage and affordability improve. An alternative repayment route would be the sale of land to reduce or repay the facility.

For UK Agricultural Finance, the case demonstrates why understanding the wider circumstances behind a borrowing requirement can be just as important as assessing the agricultural assets themselves.

This was a business that had experienced difficulty, adapted, diversified and established several increasingly complementary revenue streams.

The refinance gives the borrowers a more straightforward financial structure while providing additional capital to continue developing a resilient rural business.

Every agricultural refinance requirement is different. UK Agricultural Finance considers the property, the business, the people behind it and the realistic route to repayment when assessing a proposal.