For many farmers, diversification is no longer a “nice to have” — it’s a necessity. Rising input costs, price volatility, and pressure on traditional margins mean that on-farm retail, food production, and direct-to-consumer sales are increasingly vital to long-term resilience.
Yet while the idea of diversification is widely supported, funding it in practice is often where plans stall.
A recent case involving a farmer in Gloucestershire highlights how specialist asset finance can play a crucial role in turning a diversification plan into reality.
The challenge
The farmer, operating a mixed agricultural business, had identified a clear opportunity to launch a small on-site farm shop. The aim was to sell produce directly to the local community, improve margins, and create a more stable secondary income stream alongside farming activities.
The business plan was sound, demand had been validated locally, and the farmer had already invested significant time and capital into preparing the site.
However, funding the final stage — including shop fixtures, refrigeration equipment, EPOS systems, and associated fit-out — proved challenging.
Traditional lenders were reluctant to support the deal due to:
• The new venture having no trading history
• Diversification income not yet being proven
• A preference for property-backed lending rather than equipment
• A slow decision-making process that risked delaying the launch
The farmer needed funding quickly, without excessive complexity, and in a structure that aligned with early-stage cashflow.
The solution
Working with Alchemy Business Finance, a £65,000 asset finance facility was structured to support the launch of the farm shop.
Rather than focusing solely on historic accounts or future projections, the funding was assessed based on:
• The underlying strength of the core farming business
• The value and suitability of the assets being financed
• The realistic cashflow generated by the diversification plan
• The farmer’s experience and commitment to the project
The facility covered key equipment required to get the shop operational, allowing the farmer to preserve working capital and avoid tying up cash reserves at a critical stage.
Crucially, the funding was approved and completed quickly, enabling the farm shop to open as planned rather than being delayed by prolonged credit processes.
The outcome
The farm shop launched successfully and has quickly become an additional revenue stream for the business, helping to smooth income and reduce reliance on primary agricultural output alone.
By using asset finance rather than unsecured borrowing or property-backed lending, the farmer was able to:
• Match repayments to the useful life of the equipment
• Maintain cashflow during the early trading period
• Retain flexibility for future investment
• Avoid over-leveraging the farm’s property assets
For brokers, this case illustrates how asset finance can be a highly effective tool for supporting diversification — particularly where speed, practicality, and common-sense underwriting are required.
Why this matters for brokers
Farm diversification deals often sit in a grey area between traditional agricultural lending and SME finance. They may be too small or too specialist for banks, yet too important to be delayed or declined outright.
Specialist lenders that understand both farming and diversification can offer brokers:
• Faster decision-making
• Asset-led underwriting
• Flexibility around new income streams
• Solutions for tenant farmers and non-standard cases
As this Gloucestershire case shows, the right funding structure at the right time can be the difference between a project remaining an idea — or becoming a viable, income-generating business.
For NACFB members, diversification continues to present a growing pipeline of opportunity, particularly when paired with lenders willing to look beyond rigid criteria and focus on real-world outcomes.