Unlocking the finance in your acres

    Unlocking the finance in your acres

    Scottish landowners are adopting an increasingly entrepreneurial approach to developing their estates and agricultural businesses, and are thus becoming a more attractive proposition for bank lending.

    Sourcing finance to develop rural enterprises while the economy continues in a state of flux and banks maintain cautious lending policies is a challenge, but lenders are realising that a range of business initiatives can increase the viability of landholdings for lending.

    ‘Banks really are taking notice of landowners entrepreneurial approach,’ says Hugo Struthers, Savills Head of Rural Valuation in Scotland. ‘Several are increasingly looking past the heritable value of land, bricks and mortar when considering lending to a rural client, and are taking account of a landholding’s overall capacity to service loans through their associate trading businesses.

    ‘The key to establishing value within any enterprise is to be able to demonstrate its potential market. More banks are looking at the bigger picture and assessing factors such as cash flow, profit margins and evidence of investors when assessing the ability of a rural property to service debt.’

    That means that identifying potential business opportunities could make finance easier to source. As ever, specialist knowledge is key. ‘Our specialist teams can advise on all aspects of rural business activity,’ says Hugo. ‘Recent valuation portfolios have included meat processing, renewable energy, waste recycling, fruit and vegetable businesses, and golf courses. We are able to interpret how each of these elements interrelate — for example, what impact might a complicated wind farm option have on the value of the associated property? Or how much does the return from an estate’s renewable business compensate for any loss of residential value?

    ‘Our key concerns are to protect the bank’s security over the loan, and to identify maximum value for the borrower. In many cases we can recommend how a business can improve its operations, with reference to our UK-wide benchmarking analysis. Part of our role is to identify risks and inefficiencies, all of which is in the interest of both the borrower and lender.’

     
     

    Key contacts

    Hugo Struthers

    Hugo Struthers

    Director
    Rural

    Savills Perth

    +44 (0) 01738 477 501

    +44 (0) 01738 477 501