The County Land & Business Association (CLA) recently spoke to us about how we’ve supported rural businesses, providing the finance for diversifications before, during and after the pandemic. Here is the feature that appeared in the October edition of their Land & Business Magazine:
The need for bespoke economic support for rural businesses has been brought sharply into focus as businesses adapt to the tumultuous changes of 2020. The unprecedented changes brought about by the Covid-19 pandemic have brought significant challenges to rural business across England and Wales and has highlighted the need for specialised support to create economic resilience.
Lending firm Folk2Folk, which matches local businesses with investors, has continued to support small and medium enterprises throughout the pandemic, recognising the importance these businesses have in the overall health of the rural economy.
During the pandemic, it saw good levels of loan applications from businesses needing finance but who were unable to obtain it via their bank. Between March and July, the company facilitated a total of £25.3m of loans, which were funded entirely by Folk2Folk’s community of individual, everyday investors.
Managing Director Roy Warren says: “Economic stagnancy is not healthy and so throughout the pandemic we’ve kept our doors open and continued to lend to businesses. Small businesses are the lifeblood of our communities and we’ve felt itmportant to keep the economy moving by helping to facilitate the flow and circulation of finance. “For some businesses, everything will have changed and they may need to invest in new ways of operating or consider a new direction by diversifying. “Many of our customers pivoted their business during lockdown. Being forced to consider new ways of working or diversification has resulted in new strings to their business bow and in some instances a wider customer base.”
In July the company was approved for accreditation by the British Business Bank as a lender under the Coronavirus Business Interruption Loan Scheme (CBILS). The scheme supports the continued provision of finance to UK smaller businesses during the pandemic. It enables lenders to provide facilities of up to £5m to smaller businesses who are experiencing lost or deferred revenues, resulting in disruptions to their cashflow.
“Folk2Folk’s purpose has always been to support Britain’s rural businesses and ensure our countryside is a thriving place to live and work,” says Folk2Folk Co-founder and Director Louis Mathers. “Many of our loans don’t only benefit the borrower and the investor, but have flow on benefits for the local supply chain, increased employment, or a new local service or attraction.”
CLA member Barnowl Jerseys, at Cloisters Farm in Northamptonshire, was seeking a loan to fund a farm diversification project which included in-house pasteurisation , developing a range of homemade ice creams, and completely fitting out a butchery and farm shop – Barnowl Farmshop. After being rejected for a loan from high street banks, Folk2Folk was recommended by a financial broker, and they were able to successfully obtain the loan. The wider local impact of the loan can be seen in the employment of local tradesmen and suppliers, as well as four new members of staff with further employment opportunities once the butchery is open.
Heidi Reader, of Barnowl Jerseys, explains that securing the loan has helped ensure the herd remains milking and enabled the first stage of its succession plan. “Without this opportunity there is a high chance that this would not be the case,” she says. “Our neighbours and local community are as excited by our farmshop development as we are.”
The CLA does not endorse any particular lender or financial product. It is important to ensure you carry out sufficient research and get your own advice from an independent financial adviser, including advice on the suitability of any financial product. Always obtain legal advice on any documentation before signing.
This article first appeared in the October edition of the CLA’s monthly member magazine Land & Business. Find out more by visiting www.cla.org.uk/about/members-area/land-business-magazine.