Savvy tips for Agriculture finance

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Considering taking on an agricultural loan? Savvy Finance chief executive Bill Tsouvalas has some recommendations.

Picture: Hero Images/Hero Images/Getty Images
Picture: Hero Images/Hero Images/Getty Images

[SPONSORED CONTENT] Keeping your agribusiness afloat requires a good mix of skill and finance. Thankfully, finding a source of finance that understands your business is not that hard as there are many options for you to choose from.

At Savvy, we understand that agriculture finance is a key element that drives innovation and efficient production in the agribusiness sector, and we are proud to support regional Australia in this way.

If you are considering taking out an agricultural loan, but are not too sure how it will work for your business, this guide can help you know what features to compare to make the most of it.

What can an AgriLoan do for you?

An Agribusiness loan is the same as a business loan that can be used to take care of various expenses that your business will face. It can help you cover various expenses such as purchasing property, machinery, equipment, technical devices, purchase breeding stock, and also help you manage your cash flow more efficiently. 

But not all loans are equal, and the longevity of your business could depend on the type of features that come with your loan options.

Checking whether a loan has flexible repayment schedules, fixed or variable rates or redraw facilities can help you find a loan that is tailor-made towards your needs.

If your business is seasonal make sure to check that your loan comes with repayments that match your cashflow.

The interest rate makes a world of difference

It may not seem like much, but a 1 per cent difference of a loan can equate to you saving thousands of dollars. According to the recent Banking Royal Commission, there were 0.65 per cent of farm business entities that had loans that were 90 days overdue in payment. 

Furthermore, the average debt (total credit outstanding) for each business entity was $481,428 in 2017. Comparing the interest rate on loans to find one with a competitively low rate can be beneficial to your business. 

Fees and charges

You may have spotted a loan that comes with an interest rate that is tempting such as 0 per cent interest rate loans. However, if you read the fine print you could be shocked at the fees and charges that come with it that could make or break your repayments. There are some once-off payment fees and there are some ongoing fees that need to be checked before signing the agreement. Always remember to compare your options before deciding. 

Do you meet the eligibility criteria?

Getting a loan for your business shouldn’t be a rushed process. This means checking if you meet the eligibility criteria so that your application doesn’t get rejected too many times in a short space of time which can affect your credit report. Take your time when reading the fine print and checking with an account to see if the loan will be suitable for you. 

Speaking to a broker or a financial advisor can be a good way to know what options are available for you and which one will be suited for your current situation until the loan term ends.

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