Agri finance for new parlour

stagg88

Just wondering what options are available. I have a new parlor speced and approved from a TAMS 2 point of view and a bit of a handling area also, Its coming to 105k. Have a partnership with the father too. He is entitled to grant @40% and I am entitled @60%. It works out we need a loan for 47k over 7 years and 58k of a bridging loan. None of the banks will give us a loan with out land as security. The last 2 years have been tough enough but a profit has been made over both years. I work off farm too and our track record is good. never having a bad loan ever. I don't want want to hand over folios as security what other options do I have dos any one know?

jaymla627

stagg88 wrote: »

Just wondering what options are available. I have a new parlor speced and approved from a TAMS 2 point of view and a bit of a handling area also, Its coming to 105k. Have a partnership with the father too. He is entitled to grant @40% and I am entitled @60%. It works out we need a loan for 47k over 7 years and 58k of a bridging loan. None of the banks will give us a loan with out land as security. The last 2 years have been tough enough but a profit has been made over both years. I work off farm too and our track record is good. never having a bad loan ever. I don't want want to hand over folios as security what other options do I have dos any one know?

Local credit union would be a good bet but you'll pay 7% plus interest, also could get a personal loan from your bank for 30-40k handy enough but again interest rates will be plus 7%.....
If your a Glanbia supplier you could available of the agri-flex loan but will be tied to them for the duration of loan period

Signpost

Could be wrong but won't the grant go in under the partnership number so you will only be able to draw 60% of the 80k as a YF and your father not get anything from his 40%? So regardless of 2 people the most you will get back is 48000 for the job.

Sillycave

Signpost wrote: »

Could be wrong but won't the grant go in under the partnership number so you will only be able to draw 60% of the 80k as a YF and your father not get anything from his 40%? So regardless of 2 people the most you will get back is 48000 for the job.

As far as i am aware the OP calcs are correct, he will received a 60% grant on the first 80K and a further 40% on the next 80K due to the partnership, i.e. a total of 160K grant ceiling

Signpost

Sillycave wrote: »

As far as i am aware the OP calcs are correct, he will received a 60% grant on the first 80K and a further 40% on the next 80K due to the partnership, i.e. a total of 160K grant ceiling

Had read that wrong when looking at it before so, thanks for the heads up on it!

yewtree

stagg88 wrote: »

Just wondering what options are available. I have a new parlor speced and approved from a TAMS 2 point of view and a bit of a handling area also, Its coming to 105k. Have a partnership with the father too. He is entitled to grant @40% and I am entitled @60%. It works out we need a loan for 47k over 7 years and 58k of a bridging loan. None of the banks will give us a loan with out land as security. The last 2 years have been tough enough but a profit has been made over both years. I work off farm too and our track record is good. never having a bad loan ever. I don't want want to hand over folios as security what other options do I have dos any one know?

I wouldn't be so against giving some security, if it allows you get a better interest rate. You wouldn't be handing over the deeds to the farm. For a farm development loan previously 1 put up a field. There was a big difference in the rate and lenght of term between secured and unsecured.
Jay is right the credit union would give the loan but interest rates aren't that competitive also not sure how the credit union are with bridging loans

stagg88

The interest rates are fairly high anyway I think its 6% with AIB and BOI give or take. With lakelands as supplier. I don't think I'd get the personal loan as have a decent size mortgage too. Just thought there might be an easier way. Hate to think of those shower having the folios for 6 or seven years!!!It wouldn't encourage any young person to expand mind you

stagg88

Maybe your right Yewtree. Was it much hassle supplying it to the bank with solicitors etc. I never looked too closely at it before but I think the farm is in one folio number too

yewtree

stagg88 wrote: »

Maybe your right Yewtree. Was it much hassle supplying it to the bank with solicitors etc. I never looked too closely at it before but I think the farm is in one folio number too

There isnt that much to it more the cost of solictor and enginner. I got an engineer to make off the field (as all the land was in the one folio aswell) and the bank took that against the loan. I would obviously perfect not to give security and you try to negoiate as little as possible but it was a necessary evil.

The part time boy

I also add not ruling out handing farm over as grantee. Our farm has been with the bank for as long as I can remember never made any difference .

We have always had some loans over the years to improve

Buckmickley

stagg88 wrote: »

Just wondering what options are available. I have a new parlor speced and approved from a TAMS 2 point of view and a bit of a handling area also, Its coming to 105k. Have a partnership with the father too. He is entitled to grant @40% and I am entitled @60%. It works out we need a loan for 47k over 7 years and 58k of a bridging loan. None of the banks will give us a loan with out land as security. The last 2 years have been tough enough but a profit has been made over both years. I work off farm too and our track record is good. never having a bad loan ever. I don't want want to hand over folios as security what other options do I have dos any one know?

If you supply Glanbia or could supply them and don't have an issue with being tied to them for 7 years,then their milk flex loan via Rabbo is ideal for your situation
No land security required

maidhc

yewtree wrote: »

There isnt that much to it more the cost of solictor and enginner. I got an engineer to make off the field (as all the land was in the one folio aswell) and the bank took that against the loan. I would obviously perfect not to give security and you try to negoiate as little as possible but it was a necessary evil.

It is very slow and painful. Avoid if you can, and I am speaking with my solicitor hat on.

Sam Kade

yewtree wrote: »

There isnt that much to it more the cost of solictor and enginner. I got an engineer to make off the field (as all the land was in the one folio aswell) and the bank took that against the loan. I would obviously perfect not to give security and you try to negoiate as little as possible but it was a necessary evil.

With AIB you have to pay their solicitor as well around 3 k in total.

yewtree

Sam Kade wrote: »

With AIB you have to pay their solicitor as well around 3 k in total.

I can't remember how much it cost us it was done originally 9 years ago with BOI. The one advantage with having some security with the bank is when we did another loan last year we didn't have to go through that expense a second time

The part time boy

I would agree with it's long painfull and costly experience to get set up with the bank. However once it done once it done for ever if you ever wished to get another loan

atlantic mist

got parlor loan at less than 4% from banks, security given
cost of finance is more expensive with no collateral as rated as a higher risk,
glanbia agri flex loans are secured by our coop, nothing is free

bear in mind the vat cost when drawing down loan, bank base figures on net equipment cost so you will have to account for vat in bridging loan otherwise it may put you under cash flow pressure

bank have a panel of solicitors price them around huge variations between them

maidhc

The part time boy wrote: »

I would agree with it's long painfull and costly experience to get set up with the bank. However once it done once it done for ever if you ever wished to get another loan

Try and avoid offering agri land as security for anything is my view. A lot of farmers have gone broke from building sheds and buying machinery on the foot of secured loans. Banks are mad to lend given the massive security they have, and something the ability to repay and live comfortably is cast aside.

On the other hand I am all for securing mortgages against land to buy that land, it is the only way you can get it, and is far less risky.

atlantic mist

dont think it was the secured loans than caused them to go broke to be fair

The part time boy

maidhc wrote: »

The part time boy wrote: »

I would agree with it's long painfull and costly experience to get set up with the bank. However once it done once it done for ever if you ever wished to get another loan

Try and avoid offering agri land as security for anything is my view. A lot of farmers have gone broke from building sheds and buying machinery on the foot of secured loans. Banks are mad to lend given the massive security they have, and something the ability to repay and live comfortably is cast aside.

On the other hand I am all for securing mortgages against land to buy that land, it is the only way you can get it, and is far less risky.

You should be getting loans that you can afford and have back up plan incase of bad year . If you do that you don't have to worry about the land. I never borrowed more than my liquid assets was my rule . So of things went tits up I never had to sell land to cover loans

ganmo

atlantic mist wrote: »

dont think it was the secured loans than caused them to go broke to be fair

No but it probably made the hole deeper when they fell into trouble

Keepgrowing

You need to borrow 20% more than you think you need

You need to borrow for longest period you can get them to agree to, there's no rush in paying back

You need to agree to offer some security, it will be dead safe so long as you make your payments as per agreement. It's also done to allow you do further borrowing at a later date. You should also be on a better position to negotiate a better rate.

anfieldrd

In the process of moving banks to BOI l from AIB, young farmer in partnership also working off farm. AIB weren't keen on backing me for a loan for new parlour etc. where BOI refinanced loans and approved new loans, over a longer period and lower interest rate.

It will cost between 2-3000 to transfer deeds from AIB but BOI will pay 1000 of it. I feel that BOI have a better concept of the dairy industry where with AIB I was dealing with someone in Dublin who couldn't understand why I wanted to waste money on buying top quality calved down heifers rather than produce them within herd🙄

Keepgrowing

anfieldrd wrote: »

In the process of moving banks to BOI l from AIB, young farmer in partnership also working off farm. AIB weren't keen on backing me for a loan for new parlour etc. where BOI refinanced loans and approved new loans, over a longer period and lower interest rate.

It will cost between 2-3000 to transfer deeds from AIB but BOI will pay 1000 of it. I feel that BOI have a better concept of the dairy industry where with AIB I was dealing with someone in Dublin who couldn't understand why I wanted to waste money on buying top quality calved down heifers rather than produce them within herd🙄

Not bank loyal here but I feel nobody should deal with a " tie boy" based in Dublin.

My advice would always be, have all meetings in your office/kitchen. Get them out on farm to see what you're doing. It really makes some difference and you put a face to the name. Very important to build a relationship.

I bought land, built sheds and increased cow numbers here yet I've never been in my bank managers office. All meetings held on farm with us setting agenda.

They are money shops, nothing more nothing less.