A young successor’s guide to financing the farm
Taking on the management and ownership of a farm brings significant financial responsibility for young farmers. A recent video, produced as part of Generational Renewal Week 2026, highlighted the importance of planning, cash-flow management and building a strong track record when financing the farm business.
Teagasc Farm Management Specialist, Kevin Connolly and Donal Whelton, Head of Food, Fishing and Agriculture at AIB, explored the key steps young farm successors should take before borrowing. They discussed finance options and strategies for farmers investing in their businesses, including farm planning, repayment capacity, grants, loan options and ways to finance investments without putting unnecessary pressure on the business.
For a young farmer taking over a farm business having sufficient capital is important. In the early years, the farm is establishing itself and the financial benefits of investments may take time to materialise. As Donal Whelton highlighted: “You don’t want to squeeze the business of cash flow in the first number of years.” Ensuring sufficient working capital can provide breathing space to deal with seasonal costs, volatility and unexpected events.
A range of finance options may be available depending on the purpose of the funding. These can include overdraft or current account options, seasonal credit lines for input costs, stocking loans, machinery finance through hire purchase or leasing and sustainability-focused loans. Grant aid can also play an important role in funding capital investment, but grant availability should not be the reason for making an investment.
“Any investment should be aligned to the long term plan for your business” was the advice given. “Just because there might be an attractive grant there, you shouldn’t align your investment just because you want to avail of a grant” said Donal.
When considering an investment, farmers should ask three questions:
- Is it necessary?
- Will it pay its way?
- Is the timing right?
This allows for prioritising of investments and avoiding unnecessary pressure on cash flow.
A business plan is central to this process. The plan should outline where the farm is going and include realistic assumptions around output, costs and performance. It should also consider potential risks.
The webinar highlighted the value of considering stress scenarios in a business plan, considering what might happen if prices fall, interest rates rise or costs increase. This demonstrates that the farmer has considered potential risks and how they might be managed.
From a lenders perspective, Donal said: “Repayment capacity is the number one key consideration.” If the business cannot demonstrate an ability to repay, other considerations become less relevant. Track record and the ability to manage risk are also important considerations.
Farmers should aim to build a buffer when trading conditions are favourable, providing some protection when prices fall or costs increase.
Regular communication with the bank can help identify problems before they become serious. Monthly cash-flow budgeting can highlight future funding requirements and engagement with the bank can help ensure that support is available when required.
For further information, watch the full recording below:
Generational Renewal Week 2026 took place from September 7-11, 2026.
Find out more about Generational Renewal Week and the full programme here.