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

Q: Are rates fixed or variable?

HP and many leases are fixed-rate. Unsecured loans may be fixed or variable, and invoice finance is commonly linked to Base/SONIA plus a margin. Check which you are being offered and how it could change costs.

Typical UK interest rates for agricultural business finance range from about 6% to 25% APR, depending on product type, security, and risk. Asset and equipment finance tends to be at the lower end, while unsecured working capital and cash advance products sit higher. Fees usually include an arrangement fee of 0%–5%, plus documentation, valuation, and potential early settlement charges.

Typical UK rates by agricultural finance product

Rates vary by the type of funding you choose, your farm’s financial profile, and the strength of the asset or security involved. Lenders also price against Bank Rate/SONIA and their current appetite for the agriculture sector. The ranges below are indicative, not offers, and can change with market conditions.

Quick comparison: finance types and indicative pricing

Finance type	Typical pricing	Common fees	Notes
Asset finance (HP/lease) for machinery, tractors, kit	~6%–16% APR equivalent	Arrangement 1%–3%; doc/option-to-purchase £95–£295	Lower rates with newer kit, bigger deposits, strong credit
Vehicle & fleet finance (pick-ups, vans, sprayers)	~6%–12% APR	Arrangement 0%–2%; doc fee £100–£250	Manufacturer campaigns can temporarily reduce rates
Unsecured business loan (working capital)	~9%–25% APR	Arrangement 0%–5%; early repayment fees may apply	Often requires personal guarantee; terms 1–5 years
Secured term loan (non-property assets as security)	~7%–15% APR	Arrangement 1%–3%; valuation/legal as applicable	Lower LTV and robust security generally price better
Invoice finance (farm suppliers, agri-services)	Discount fee typically Base + 2%–4% p.a.	Service fee ~0.25%–3% of turnover; minimum fees apply	Costs linked to usage, debtor quality, and concentration
Asset refinance (unlock equity in machinery)	~7%–15% APR	Arrangement 1%–3%; valuation/inspection	Useful for cash flow using owned kit as security
Livestock finance (specialist lenders)	~8%–18% APR	Arrangement 1%–3%	Specialist underwriting considers herd turnover and markets
Trade/import finance (feed, materials, equipment)	Base + ~2%–6% p.a.	Transaction fees 0.5%–3%	Short-term, event-driven, priced per transaction
Merchant cash advance (farm shops, cafés)	Factor 1.15–1.50 (effective APR often 20%–60%+)	Usually bundled; sometimes set-up fee	Repayments flex with card takings; faster but costlier

Representative illustration (for guidance only)

Borrow £50,000 over 60 months at a fixed 10.9% APR; monthly repayment ~£1,089; total repayable ~£65,340; arrangement fee 2% (£1,000) added to the facility. This is an example, not an offer, and your rate and terms will vary by circumstances.

Important

All figures are indicative, for established UK businesses only, and subject to lender approval, credit status, and market conditions. Rates may be fixed or variable. Always review the lender’s full terms and a personalised quote before committing.

Fees you should expect with agricultural finance

Beyond the interest or margin, most facilities come with fees that affect your true cost of funds. Understanding these charges helps you compare quotes on a like-for-like basis. Ask providers to disclose every fee up front in writing.

Common one-off and ongoing charges

Arrangement fee: typically 0%–5% of the facility amount, often lower on asset-backed deals and higher for unsecured loans.
Documentation/acceptance fee: usually £95–£295 for asset finance; sometimes called an admin or doc fee.
Option-to-purchase fee (HP only): often £10–£100, payable with the final instalment to transfer title.
Valuation/inspection fees: for used machinery or specialist assets; costs vary with the asset and location.
Service fee (invoice finance): ~0.25%–3% of turnover or invoice value; may have minimum monthly fees.
Discount fee (invoice finance): usually Base/SONIA plus 2%–4% per annum on funds in use.
Legal fees: sometimes charged on larger secured facilities or where bespoke documentation is required.
Broker/introducer fees: some brokers charge the borrower; others are paid by the lender; confirm the model used.
Early settlement/termination: HP often rebates interest but may charge an early settlement adjustment; leases usually require remaining rentals less a discount; unsecured loans may charge 1–2 months’ interest equivalent.
Default/late payment fees: additional interest or fixed charges if you miss payments; check the tariff of charges.

VAT and tax points to note

With HP, you typically pay VAT on the purchase price upfront, unless structured differently. With leasing, VAT is usually charged on each rental. Speak to your accountant about potential capital allowances, AIA, and any available reliefs for qualifying equipment.

Comparing flat rates and APR

Asset finance quotes are sometimes shown as a flat rate per year, which is not directly comparable to APR. A 5% flat rate can translate to roughly 9%–10% APR depending on term and structure. Ask for an APR or total amount payable for a fair comparison.

What actually drives your farm’s rate and fees?

Lenders price risk, liquidity, and operational complexity. The more certainty they have on your cash flow and security, the sharper the pricing tends to be. These are the variables they commonly consider.

Business profile and performance

Years trading, profitability, leverage, and cash coverage all matter. Up-to-date management accounts, filed accounts, and bank statements help lenders underwrite efficiently. Seasonal cash flow is normal in agriculture, but clarity on cycles reduces perceived risk.

Credit quality and payment history

Company credit score, director credit, and any prior arrears influence pricing, particularly on unsecured lending. Clean histories and strong trade references can materially improve terms. County Court Judgments or recent credit stress typically add cost or restrict options.

Asset strength, age, and resale value

Newer, liquid assets like tractors and combines are easier to finance and resell, so they attract lower rates. Specialist or older kit, or assets with limited secondary market demand, can price higher. Deposit size and loan-to-value are key levers.

Security, guarantees, and LTV

Providing robust security lowers risk and rate. Personal guarantees are common on SME loans; asset-backed deals may rely primarily on the equipment. Lower LTV and larger deposits usually reduce interest margins and fees.

Facility size, term, and structure

Larger, longer-term deals can price competitively, but lenders will seek evidence of affordability through cycles. Matching term to asset life avoids negative equity and mispriced risk. Seasonal or deferred profiles can be available for farms subject to milk cheques or crop income timing.

Government support schemes

Under the British Business Bank’s Growth Guarantee Scheme (GGS), lenders may be more willing to approve eligible loans. Pricing is still set by the lender and reflects risk, but the guarantee can improve access. You generally won’t pay a separate government guarantee fee as a borrower under GGS.

Documentation that typically helps

Last two years’ filed accounts and the latest management accounts.
Recent bank statements (3–6 months) and any existing finance schedules.
Asset details, quotes, or valuations for equipment-based lending.
For invoice finance: ledger, debtor concentrations, and standard terms.

How to compare offers and reduce your overall cost

Comparing by rate alone can be misleading. You want to understand total cost over the term, flexibility, and how the product fits your cash flow. Use the steps below to evaluate options on a level playing field.

1) Ask for APR and total amount payable

APR helps you compare across products where possible, though not all structures have a true APR. Always request the total repayable including all fees for the full term. For invoice finance, compare the fully loaded annual cost at your expected utilisation.

2) Sense-check fees and small print

Scrutinise arrangement, doc, valuation, and early settlement terms. Clarify default interest and any covenants or triggers. For leases and HP, understand ownership outcomes and end-of-term costs.

3) Align term to asset life and seasonality

Do not finance short-life parts over very long terms. Seasonal repayments can smooth cash flow and reduce stress risk. Matching finance to harvest or milk cycles can also lower perceived risk and improve pricing.

4) Improve LTV and present stronger information

Higher deposits or stronger security can shave margins. Provide clean, current accounts and explain any one-off variances. A well-presented case often attracts better terms from multiple providers.

5) Consider alternatives and blended solutions

Asset finance for machinery may be cheaper than a general unsecured loan. Invoice finance can be more cost-effective for businesses selling on credit to large counterparties. Combining products can optimise cost and flexibility.

Early repayment and refinancing

Check whether early settlement saves you interest or triggers fees. On HP, interest is typically rebated, though methods vary. Refinancing improved assets or consolidating at review can sometimes reduce your blended cost.

How Best Business Loans helps UK farms and agribusinesses

Best Business Loans does not lend money; we help you find relevant, trustworthy providers. Our AI-driven platform matches your profile to lenders and brokers active in UK agriculture. You save time, compare options, and stay in control of your decision.

If you are exploring agriculture business loans, we can introduce you to specialists in equipment, vehicle, invoice, livestock, and working capital finance. Submitting a Quick Quote is free and without obligation. We aim to keep information fair, clear, and not misleading so you can make informed choices.

There’s no guarantee of approval or the lowest rate, and pricing is always subject to status and underwriting. We may receive a commission from the provider if you proceed. You will always see key terms, fees, and documents from the lender or broker before you decide.

Quick steps to get started

Complete a Quick Quote with your funding need, amount, and purpose.
Share recent accounts, bank statements, and asset details if relevant.
Review introductions to suitable providers and compare terms.
Choose the route that fits your farm’s cash flow and goals.

Ready to explore options for your farm or agri business? Get Your Free Quick Quote Now.

FAQs: agricultural finance costs, answered

What is a good rate for tractor or machinery finance?

Strong applicants buying new or nearly new equipment may see APR equivalents in the 6%–10% range. Older kit, lower deposits, or weaker credit can push this into the low-to-mid teens. Always compare total payable and fees.

Are rates fixed or variable?

HP and many leases are fixed-rate, giving certainty over the term. Unsecured loans may be fixed or variable, and invoice finance is commonly linked to Base/SONIA plus a margin. Check which you are being offered and how it could change costs.

Do I need a deposit for equipment finance?

Many providers ask for 5%–20% deposit on HP or lease. Zero-deposit options exist but can increase the rate or total payable. A higher deposit usually lowers risk and pricing.

Can repayments be seasonal?

Yes, many agri-friendly lenders offer seasonal profiles to match crop or milk income cycles. This can improve affordability and reduce arrears risk. Ask for seasonal or deferred structures at quotation.

Does Best Business Loans charge me a fee?

Submitting an enquiry is free, and we’re an independent introducer. If any broker or lender fees apply to you, they will disclose them clearly before you proceed. We may receive commission from our partners if you take out a facility.

Key takeaways

Indicative APRs: ~6%–16% for asset/vehicle finance; ~9%–25% for unsecured loans; invoice finance commonly Base + 2%–4% plus service fees.
Expect arrangement fees of 0%–5%, plus documentation, valuation, and potential early settlement charges.
Better pricing comes from stronger credit, newer assets, lower LTVs, and well-presented financials.
Match terms to asset life and consider seasonal repayments to fit farm cash flow.
Use multiple comparable quotes and total cost, not just headline rate, to choose.

Compliance and transparency

Information on this page is for UK businesses only and is general in nature. It is not advice; always consider independent professional guidance. Any financial promotion you receive from a provider should be fair, clear, and not misleading, and you should read all terms carefully before committing.