UK Agricultural Finance provides £3.3m to build hydro

UK Agricultural Finance has provided a £3.3m bridging loan to help a farmer build a hydro in Scotland.

The lender provided the loan at 65% LTV for a period of 30 months to the farmer – located in the Borders – to allow for the construction of a run-of-river hydro plant.

The farmer had a feed-in tariff (FiT) for a 600kW, high-head, run-of-river plant on their land. 

Other offers of finance wanted a large portion of the project equity in addition to interest charges. 

However, UK Agricultural Finance was quickly able to confirm that the project was in a good catchment area with a simple construction process.

This allowed the lender to craft a simple SME loan without the overhead of a project finance structure. 

The loan took into account the first charge collateral over the client’s land and also recognised the increased project value as each construction step was completed. 

“It has been great to be able to assist an experienced farmer to diversify and provide quick, flexible finance that allowed him to secure the 20-year cash flows without having to give up equity,” said Graham Noble at UK Agricultural Finance. 

“We provide traditional, responsible lending and know rural property where a ‘one size fits all’ doesn’t work.

“Our team financed its first renewable energy project in 1997 and we will consider any proven technology.”

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