Seasonal overdraft for a grower

The situation

The following is an anonymised composite reflecting a recurring pattern, not a specific settled deal. A horticultural grower needs to fund seed, fertiliser, irrigation and seasonal labour costs several months before the crop is harvested and sold, creating a predictable but significant cash flow gap that repeats every growing season.

Why it's hard

The gap is seasonal and recurring rather than a one-off need, so a standard term loan, drawn once and repaid on a fixed schedule, does not match the pattern of the underlying cash flow, which peaks at harvest and troughs well before it. Weather and commodity price movements also mean the exact timing and size of the harvest proceeds are not perfectly predictable year to year.

How it can be structured

A revolving line of credit, secured against farmland or other property, sized to cover a typical season's input and labour costs, is the standard structure, drawn down through the growing period and repaid as harvest proceeds come in, then available to draw again the following season; the exit each cycle is the sale of the harvested crop. A specialist rural lender will generally size the facility against several years of historical income and yield data rather than a single season, smoothing out the effect of any one difficult year on the facility's ongoing availability. Where the grower also holds water entitlements, these are typically assessed as a distinct, valuable component of the overall security position.

Because a single poor season can otherwise dominate a lender's view of a farm's income, most specialist rural lenders will smooth their assessment across three to five years of yield and price data, explicitly discounting any one unusually difficult year rather than treating it as representative of the farm's ongoing capacity. Growers with diversified crops or staggered harvest timing across different varieties sometimes present a steadier overall cash flow profile than a single-crop operation, which a lender will factor into how the facility is sized and how conservatively it is drawn down through the season. Where a grower also holds forward supply contracts with a processor or wholesaler, providing these alongside the application gives the lender a further, more concrete basis for the expected harvest proceeds than historical averages alone. Facilities are typically reviewed annually, giving both grower and lender the opportunity to adjust the limit as the operation's scale, crop mix or historical performance changes from one season to the next.

What it typically costs

Pricing on a seasonal line of credit reflects the farm's income history and the security offered, quoted on enquiry once a specialist rural lender has reviewed several seasons of financial and yield data. Costs typically include a line fee on the facility limit and interest on amounts drawn, consistent with a standard revolving facility structure.

Timeline

1. Same day — scoping call confirming the crop type, growing cycle and typical input costs.
2. 5–10 business days — farm valuation and historical yield and income data review.
3. 5–10 business days — lender matching and credit approval.
4. 5–10 business days — settlement, with the facility available ahead of the next growing season.

Questions we'd ask you

1. What crop or crops do you grow, and what does a typical season's input and labour cost look like?
2. What has your income looked like across the past several growing seasons?
3. What property or other assets are available to secure the facility?
4. Do you hold water entitlements, and if so, what scheme and reliability class?
5. How far ahead of harvest do input costs typically need to be funded?

Related

Business lines of credit · Rural & agribusiness loans · Farmers & agribusiness · Facility limit