Let me lend some advice about raising finance
With so many sources of finance available in today’s marketplace, it can sometimes be difficult to know how to go about putting a proposal together to a lender.
There are many things to consider before making a request to a lender to support a proposal. There is an old saying – a failure to plan is a plan to fail – so before asking for finance there are several important considerations.
Firstly, lenders like to see a strong track record evidenced by current financial information, so make sure that you can provide the most up-to-date details possible.
There should ideally be a detailed proposal to support any request for borrowing and this should outline the purpose of the loan, how the amount required has been arrived at, what stake is the borrower committing to the deal and what difference it will make to your business.
The crucial detail that any lender will need to see is how the borrowing is going to be serviced and repaid and what secondary sources of repayment are available if things don’t go to plan.
In the agriculture sector, because of the levels of capital required for most projects and the relatively low rates of interest that borrowers expect to be paying, all lenders will be looking for good quality, marketable security and will need an opinion of the value from a professional valuer. Lenders have very specific requirements in this respect and will expect the valuation to be in a specific format.
Lenders refer to the need for a Red Book Valuation, which is a valuation that complies with the Royal Institution of Chartered Surveyors Valuation – global standards. The valuation of the security needs to be undertaken by a RICS registered valuer who can provide the lender with their opinion of market value and market rent, justification for how the opinion of value has been reached and, among other things, guidance as to any conditions that may need to be included as part of the loan.
From a borrower’s perspective when meeting a valuer to show them the property be clear about what the security property is going to be and have as much relevant information to hand concerning things such as planning permission, easements and rights of ways and leases or occupational arrangements affecting the property.
Mark Lord, business consultant at Berrys
