For many farmers, securing finance is not simply about finding a funder; it is about proving that the farming business is ready to receive and manage the money. Poor record-keeping, weak financial systems, outstanding compliance requirements, or an unclear understanding of the business can all weaken an otherwise promising application.
So, what should farmers have in place before applying for funding, and what do funders actually look for?
Food For Mzansi spoke to Brendan Jacobs, head of agriculture for business and commercial banking at Standard Bank South Africa, agricultural economist Dr Siphe Zantsi, agribusiness consultant Sibo Molo, founder of Molo Consulting, sunflower farmer Happy Lesitsa, and Olivia Pratt, Nedbank’s head of executive sales and strategy for SME, to unpack the practical steps farmers can take to prepare for funding.
From financial statements and asset registers to credit records, tax compliance, and business registration, their advice points to one key lesson: funding readiness starts with getting the farm’s house in order long before the application is submitted.
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1. Start with accurate records
One of the first things farmers should have in place is reliable financial and production information.
Brendan Jacobs says farmers can sometimes be overly optimistic in their projections or struggle to make decisions based on reliable data.
“It is important for farmers to have relevant data and financial information in a presentable format and be able to exhibit how they integrate that in their planning and decision-making.”
Brendan Jacobs, Standard Bank South Africa
This means farmers should keep records of income, expenses, production, sales, and other activities on the farm. These records can then be used to develop realistic budgets and projections rather than relying on estimates.
Olivia Pratt says submitting incomplete or outdated information is one of the biggest mistakes farmers make when applying for finance.
“One of the biggest mistakes farmers make is submitting incomplete or outdated information. Lenders need accurate financial information and a clear view of the farm’s historical performance,” she says.
A strong application should therefore provide a clear picture of the farm’s past performance while showing how the business is expected to perform in future.
2. Get your financial statements in order
According to Sibo Molo, proper financial statements are among the most important documents a farmer can have when approaching a funder.
“The key thing is really your financial statements,” he says, explaining that these are generated from proper monthly bookkeeping.
He adds that farmers should maintain an asset register covering everything from tractors and vehicles to livestock. “Those are all your assets, and that’s what forms your balance sheet.”
An accurate asset register also gives a funder a clearer picture of what the business owns and, where applicable, what may be available as collateral.
Pratt says lenders also consider a farmer’s historical performance when assessing an application.
“A strong application combines reliable financial information, proven track record, and realistic cash flow projections that demonstrate affordability and sustainability,” she says.
3. Separate your farm and personal finances
Mixing household and farm finances can make it difficult to establish whether a farming business is actually profitable.
Molo says farmers should have a dedicated bank account for the farm and ensure that business transactions are properly recorded. “Cash must be separated. Everything for the farm must be within. So a farm needs to have its own bank account.”
He also recommends capturing transactions monthly rather than trying to reconstruct the year’s finances at the end of the financial period.
Pratt says separating personal and business finances is also part of demonstrating good governance.
“Strong governance is equally important, including separating personal and business finances, meeting tax obligations, and maintaining appropriate insurance cover,” she says. “These practices demonstrate professionalism and effective risk management.”
4. Formalise the business and secure land rights
Formalising a farming operation can help establish credibility with funders, investors, and potential business partners.
Dr Siphe Zantsi explains that formalisation involves moving from an informal operation to an officially recognised entity and properly documenting the business’s income, expenses, production, and sales. Small-scale farmers may assume they can remember all these details, but as Zantsi explains, proper records help ensure accountability, support applications for funding, and secure the farm’s future.
Farmers should also consider whether their current business structure is appropriate and ensure that partnerships or shared ventures are supported by formal agreements. Other documents farmers should have ready include an asset register and a valid lease agreement or title deed where applicable.
For emerging farmers, Pratt says a clear business plan and accurate financial information can strengthen an application.
“Emerging farmers should have a clear business plan, accurate financial information, and a good understanding of their production cycle and costs,” she says.
Where farmers have limited experience, she adds, mentorship, qualifications, strategic partnerships, and reliable market access can also strengthen an application.
5. Don’t ignore compliance or credit history
(Note: For specific SARS tax codes, VAT zero-rating, diesel refunds, and CIPC regulations, see upcoming Article 2: Tax compliance and farm finances. For evaluating personal credit scores and credit risk, see Article 3: Credit risk.)
Molo argues that compliance should not be viewed as unnecessary red tape.
“Compliance is not really red tape; it’s a document that sort of unlocks your Land Bank finance, your blended funds, your retail supply contracts and your government support.”
Sibo Molo, Founder, Molo Consulting
For emerging farmers who may not have significant collateral or years of financial history, this can be particularly important when applying for grants or government support.
Molo says new entrants should not assume that being small means compliance can be postponed. “Whether you’re a new entrant in farming, compliance is still very, very important,” he cautions.
6. Understand your farm’s risks
Funders do not only look at how much money a farmer wants to borrow. They also consider the risks that could affect the business’s ability to repay the finance.
Jacobs says lenders assess both industry risk, including the industry and geography in which the farmer operates, and counterparty risk, which relates to the management team and its practices.
Farmers should therefore be able to explain how they manage risks such as fluctuating prices, changing yields, drought, floods, disease, labour challenges, and rising costs.
“Farmers need to demonstrate their efficiencies in terms of farming practices, understanding of data and what they have contributed or done from their perspective to manage and mitigate the various risks,” Jacobs says.
Pratt adds that agriculture’s exposure to factors outside a farmer’s control makes risk management particularly important.
“Credit risk isn’t about eliminating risk, but it’s about demonstrating resilience.” — Olivia Pratt, head of executive sales and strategy for SME, Nedbank
According to Pratt, lenders need to understand these risks to ensure that funding remains sustainable for both the farmer and the financer.
“The biggest drivers of credit risk are inconsistent cash flows, high debt levels, weak financial management, and insufficient risk mitigation,” she says.
Farmers should therefore be able to demonstrate how they are managing these risks.
“Agriculture is exposed to many factors outside of farmers’ control, so lenders want to see that costs are well managed, adequate liquidity is maintained, and practical measures such as insurance, diversification, and market agreements are in place,” Pratt says.
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7. Prepare before the application opens & build partnerships
Farmers should not wait until funding applications open to start looking for documents.
Lesitsa advises farmers to apply early so that there is enough time to provide any additional information the bank may request. He also recommends working with a qualified bookkeeper or accountant, keeping records of every transaction, paying creditors on time, and maintaining a good credit record.
Limited collateral or a short financial track record can create challenges for emerging and smallholder farmers. However, Pratt says lenders may consider a broader range of factors when assessing an application.
“Historically, some emerging and smallholder farmers have faced challenges due to limited collateral or short-to-financial track records,” she says. “However, many lenders now take a broader view and also consider factors such as farming experience, production performance, market access, mentorship, and strategic partnerships.”
For farmers who are still building experience, these factors can help demonstrate the capacity and support behind the business.
“The focus is increasingly on future sustainability and growth potential, not only historical performance,” Pratt says.
8. Be honest with the funder
Finally, farmers should avoid presenting a picture of the business that is better than reality.
Jacobs’ advice is straightforward: “Be as transparent as possible with the funder you are engaging with.” He says this helps create trust and establishes a foundation for a longer-term relationship.
A farmer who can clearly explain the strengths, weaknesses, and risks of the operation is better positioned to have a meaningful discussion with a potential funder.
Pratt agrees that transparency and preparation are central to a successful funding application.
“Ultimately, successful funding applications come down to preparation, transparency, and demonstrating the ability to generate sustainable cash flow,” she explains.
“Farmers who understand their business, manage risk effectively, and keep accurate records are generally best positioned to access funding and grow their operations.”
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