What are the typical interest rates and fees for agricultural business finance in the UK?

UK agricultural business finance rates run from around 6.5% APR for a well-secured commercial mortgage on prime farmland, to 14% APR for unsecured working capital, with most agricultural asset finance pricing in the 7% to 11% APR range over 3 to 7 year hire purchase terms. Fees are typically 1% to 2% arrangement on bank facilities, 2% to 5% on specialist agricultural fintech facilities, plus valuation and legal costs on secured deals.

By product. Commercial mortgage on farm land and buildings: 6.5% to 9% APR over 10 to 25 years, 1% to 1.5% arrangement fee, valuation £1,000 to £5,000+, legal £1,500 to £4,000+. Hire purchase on agricultural machinery (tractors, combines, balers, sprayers): 7% to 11% APR over 3 to 7 years, 1% to 2% documentation fee, no valuation. Working capital term loan: 9% to 14% APR over 1 to 5 years, 2% to 4% arrangement fee. Overdraft facility: variable rate plus margin, typically 2% to 4% over base rate, plus annual renewal fee.

Specialist UK agricultural lenders include Oxbury Bank (a sector-dedicated bank launched 2021), the agricultural arms of Allica Bank, Aldermore and the high-street banks. Pricing is generally competitive because the sector is asset-rich and lenders are well-protected by charges over land, buildings, machinery or growing crops.

Annual Investment Allowance and full expensing rules make hire-purchase asset finance especially tax-efficient for farm machinery. The combined effect of capital allowances and finance interest deductibility usually makes HP cheaper net-of-tax than outright cash purchase for most UK farm businesses. See are personal guarantees or security required for agricultural finance for the security side.