Loans, mortgages and farm finance: how your legal team can help

As any farmer will know, farms are considered specialised commercial properties by lenders and can be viewed as a risk due to the fragile nature of the industry. Because of this, lenders will often take more collateral than required to secure finance. Lenders also often require a personal guarantee and indemnity to be provided by a director or key party. There are many risks associated with providing a personal guarantee and indemnity which may also affect asset protection. For this reason, legal assistance could help you secure an agribusiness loan or property mortgage and provide you with a full understanding of your obligations.

Farm Finance and Credit

In order to start or grow your agribusiness, you may need an advance of funds for stock, equipment and machinery or access to a line of credit. Loans may be leveraged to strengthen your operation, upgrade equipment, recover from debt or disaster, refinance existing debt or pay for unforeseen operating expenses such as extra staff.

There is a range of credit options available for agribusinesses.

Seasonal Short Term Finance gives you access to capital to cover cash flow shortfalls or in case you need to finance short-term production costs.

Farm Line of Credit is access to capital for you to use when and where you need it, often secured against your land.

Farm Term Loans are larger loans used for making capital improvements, purchasing property, new farm buildings or even off-farm investments. Only Australian primary producers are eligible for these loans.

Equipment Finance helps you buy, upgrade or replace equipment to increase productivity and profitability.

Livestock Finance is a short term loan that uses your current livestock as security to finance the purchase of new livestock to increase production.

At Coulter Legal, we can review and prepare documents relating to finance including the provision of a Solicitor’s Certificate. This legal document confirms to a lender that a borrower or guarantor has received independent legal advice and understands the potential liabilities and risks involved in signing the security documents.

Often lenders will indicate that the security documents are straightforward and only need a “signature” from a solicitor. This is not the case. In providing legal advice, solicitors are governed by laws and regulations not only in relation to the Credit Code affecting banks but also by the Uniform Law and the guidelines provided by the Law Institute of Victoria.

Farm Mortgages

Most farming land in Australia is held in large parcels by established companies and experienced operators, but sometimes, new farmland is purchased or a farmer may want to refinance their land to access property equity. Unlike traditional mortgage structures, agribusiness property loans can be complex and affected by a high number of variables.

All applications are very carefully assessed by lenders and as with any business, you will need to prove low risk and high profitability. Given that land and property is the cornerstone of any farm or agriculture venture, farmers often need to navigate a breadth of economic and environmental issues and challenges presented to property owners, all of which can affect the likelihood of mortgage approval.

At Coulter Legal, we understand the complex needs of agribusiness loans, intertwined family entities and the concept of cross collateral. We have extensive experience in drafting loan and security agreements and reviewing security documents from independent lenders. As explained, we are also equipped to provide Solicitors Certificates for both borrowers and guarantors and review trust deeds to ensure they have provisions to borrow or lend.

Need help?

Whether you are a family farm or commercial business, the Coulter Legal Agribusiness lawyers understand the needs of farmers and have the experience and expertise to provide clients with complete legal coverage of the Agribusiness sector. If you need support or guidance with financial documentation for your farm, please get in touch or call 03 5273 5273.