Rural Asset Finance (RAF) was established in 2019 as specialist direct lender to British farmers.

The company’s finance solutions are designed specifically to address the individual challenges and needs of farmers and range from agricultural loans facilitating farm expansion to flexible options for farm equipment purchases, such as hire purchase or leasing.

The lender also actively backs initiatives that mitigate climate change, enhance agricultural resilience, and foster a circular economy.

NatWest empowers the UK’s agriculture sector with sustainability-linked loan for Rural Asset Finance with the support of the British Business Bank

Looking for a financing package to increase their lending capacity and support future growth targets, Rural Asset Finance mandated NatWest as senior lender, hedge provider and sustainability coordinator for a £20m sustainability-linked revolving credit facility.

Following an extensive process to structure the loan’s Key Performance Indicators (KPIs), the NatWest and RAF teams arrived at a robust structure which incentivises RAF to accelerate its renewable lending and promoting sustainable farming practices. The first KPI focuses on expanding access to renewable energy by increasing lending for the installation of renewable energy systems on farms and rural businesses, particularly those whose primary income is not derived from energy generation. The second KPI focuses on promoting sustainable land management by growing the proportion of client farmland that adopts environmentally sustainable practices. The second KPI aligns with the UK Government’s Sustainable Farming Incentive, which rewards farmers for adopting and maintaining environmentally sustainable practices.

The facility for Rural Asset Finance benefits from a British Business Bank ENABLE Guarantee. The ENABLE Guarantee programme is designed to unlock additional lending to smaller businesses by reducing capital requirements for lenders. Under the programme, the UK Government takes on a portion of the risk in a transaction supporting debt finance to smaller businesses, in return for a fee.

This transaction aligns with both ours and the government’s ambitions to improve access to capital for smaller businesses in the UK, and drive growth in both the real economy and employment across communities in the UK.  

Matthew Smart, CEO and Founder of Rural Asset Finance, commented: “Food production and diversification on UK farms are key to ensuring a healthy, robust future for the industry and the wider rural economy in the current challenging geo-political landscape. With the support of the British Business Bank’s ENABLE Guarantees programme alongside NatWest and other lenders, we’re now best placed to support farmers driving efficient high-tech food production, as well as those diversifying into alternative revenue streams.”

Matthew Whittle, Speciality Finance, NatWest, said: “We’re very pleased to have been able to support Rural Asset Finance in securing this new facility, backed by the British Business Bank’s ENABLE Guarantees programme which will help unlock capital, reduce costs and ultimately increase access to competitive funding for agricultural and rural businesses across the UK. We look forward to working with Rural Asset Finance going forward as they build on prior success and in particular augment their sustainable financing initiatives.”

Vishal Saxena, Sustainable Finance Advisory, NatWest, added: “We’re delighted to have supported Rural Asset Finance structure a financing solution that enables it to accelerate its sustainability impact. The transaction is timely, as it also aligns with the UK Government’s Spending review which includes a £2.7bn commitment to sustainable farming and nature recovery through to 2028-2029.”

Michael Stevens, Managing Director, Structured FI Solutions, British Business Bank said: “This transaction with Rural Asset Finance builds on the work we’ve done through the ENABLE Guarantees programme to support the provision of funding to businesses in the agricultural sector. Collaborating with established capital providers like NatWest allows us to increase the availability of funding for non-bank lenders such as Rural Asset Finance and, through them, the smaller businesses they lend to. In addition, by including a pricing incentive linked to sustainability objectives, we hope to see further expansion of small business lending in sustainable areas, including farm renewable energy installations.”