Emäntä traktorissa

Farm financing

Are you making new investments in your farm and are in need of financing? We help you find an optimum financing solution for your farm’s purchases.

When you need financing for expanding or developing your farm business, or for making smaller or larger purchases, you can apply for a loan easily online.

Simply click on “Apply for corporate loan”, fill in your farm’s details and describe your financing need.

We will contact you within two business days from receiving your application. We will discuss with you the farm’s financing-related needs and general status. You will receive a loan decision based on the negotiations.

If you already are a customer of OP, you can also fill in the application in your OP eServices under Loans, Show more.

Bank loan forms the basis for your farm’s financing

A bank loan suits all financing needs of your farm. It is suitable for financing both long-term investments and short-term needs.

  • We will agree with you on the loan term according to the investment payback period.
  • Repayments and interest payment will be scheduled based on your income flows.
  • The price is based on interest payable on the loan plus charges for loan servicing and drawdown.
  • The borrowing rate is based on the agreed reference interest rate and a markup - the rate may also be fixed for an agreed period or throughout the loan term.

It is also possible to choose an interest rate corridor or interest rate cap for the loan which provide protection against a rise in interest rates. We also recommend taking a closer look at Payment Protection Insurance and Kultaturva in the case of serious illness which protect your finances if something bad happens.

Investment aid

For the most important investments, you can get aid and interest-subsidy loan.

Collateral for the loan in most cases is a mortgage on the farm’s real property and a business mortgage in which the farm’s moveable property serves as collateral. If there is shortage of collateral securities, government guarantee can also be used for many investments.

Hire purchase and lease are suited for financing agricultural machinery

The financing need of machinery purchases tend to be short term in nature, which is why hire purchase and lease are well suited for their financing in addition to a bank loan. Considering that the machine as such serves as collateral, you can use your farm’s collateral securities for other investments.

Also consider the working capital need of your farm

When planning financing for a farm’s investments, you should not ignore working capital that is needed for running daily operations. In investments in particular, you should carefully assess the increasing need for working capital because s surprisingly much capital is tied to warehouses, supplies and other inventories – for as long as you .run your farm.

Interested?

Visit your nearest OP cooperative bank to discuss your farm’s needs for financing. Our experts will be pleased to serve you in all financing matters related to your farm, also over the phone.

The Solid financing solution for farmers gives both monetary benefits and the necessary support for banking and insurance matters from one and the same place at the same time.

The Solid financing solution for farmers is a combination of services providing financial security. It enables your agricultural enterprise to effectively control those risks that are related to the financing costs, loan repayment or key persons’ health.

Our Solid financing solution for farmers is comprised of the following services:

  • A corporate loan at a competitive price.
  • Interest rate hedging, such as an interest-rate corridor article in the loan, without a separate charge.
  • Corporate loan repayment insurance, providing security in case the entrepreneur or other key person falls ill, for a discounted price.
  • Kultaturva insurance as an additional insurance in case of a severe illness, for a discounted price.

To make an agreement on the Solid financing solution for businesses, contact your own OP Group member bank.   If you already earlier have financing from your bank, you can add the interest-rate hedging, corporate loan repayment insurance and Kultaturva to your financing solution and receive the above-mentioned benefits.

In agriculture, risk management plays an increasingly important role. One of the production-related risks involves the possible rise of the loan interest rate in the following years.
Corporate loan repayment insurance is a useful tool for safeguarding the continuity of business against key personnel risks. The repayment insurance facilitates the repayment of a loan related to business operations in case of a loss of the work input of the agricultural entrepreneur or other key person, either permanently or temporarily.
Working capital Corporate account, Accounts receivable financing

The income and expense flows of a farm are not concurrent, there are always expenses that need to be paid before the money for the sold produce arrives in one’s account. In order to maintain liquidity, therefore, the farm needs working capital. Adequate liquidity means that all invoices are paid on time and there is also funding available for unexpected situations.

Operating capital is tied up in inventories since the farm needs to purchase feed and fertilizers for future production. In particular, when investments are made to expand the farm operations, it is necessary to calculate the increased demand of the working capital based on, for example, the increase of stored materials or number of livestock.

The working capital will be partly tied up in the farm production as long as the farm is operational, and partly it is temporary by nature, for example, fertilizers are especially needed during the spring and autumn seeding period.

Useful instruments for the provision of working capital include:

  • Corporate account with credit facility
  • Accounts receivable financing
  • Promissory note loan


Corporate account with credit facility

A credit limit facility integrated to the corporate account provides any farm with a feasible financing tool to cover short-term demands. Its volume can be determined as a specific proportion of the farm’s turnover, for example, 30 percent. It can also be estimated on the basis of larger recurrent accounting items, such as feed or fertilizer invoices.

The corporate account with credit facility provides access to funding up to the agreed limit. There is no repayment scheme for the credit, but instead, it is paid off in instalments in pace with the incoming payments for the agricultural products sold by the farm.

The corporate account with credit facility offers the following benefits:

  • The credit facility is available for the farm at all times during the agreement period up to the agreed limit.
  • The corporate account serves as the banking solution for the farm, and it can be linked with all necessary payment transaction and cash management services, cards and online services.  
  • Credit interest is only payable for the actually used amount of credit, and the incoming payments reduce the amount of credit in use.
  • The corporate account with credit facility is accessible via the online banking service, and you can use the Business Card to pay for purchases.

You can view the account events and check the credit balance via the online bank.

The costs of the corporate account with credit facility:

  • The price is comprised of the reference rate of interest and the margin as agreed upon with the bank, as well of the limit provision.
  • The interest is calculated on the used amount of credit on a daily basis.
  • The limit provision is calculated on the basis of the limit amount.

Accounts receivable financing

In case of a farm with large-scale operations, possibly including small business activities and extensive sales of goods and services, the accounts receivable financing offers an optional solution for efficient working capital financing.   

Accounts receivable financing means in practice that OP buys the undisputed sales invoices and accounts for the receivables to the farm. This enables you to rapidly reinvest sales proceeds in the business.