Weathering More Than the Seasons: Mental Health on the Land

There’s a quiet strength that comes with life on the land. Farmers are problem-solvers, risk-takers, and stewards of something far bigger than themselves. But behind that resilience is a reality that doesn’t get talked about enough—the mental and emotional toll of farming.

Unlike many professions, farming doesn’t operate within predictable boundaries. It is shaped by forces largely outside of one’s control: rainfall (or lack of it), commodity prices, global markets, biosecurity threats, and shifting policy landscapes. One good season can be followed by two tough ones. A lifetime of work can feel like it hinges on a few weeks of weather.

Right now, that uncertainty is being amplified.

Across Australia, farmers are facing a tightening economic environment. Input costs—particularly fuel and fertiliser—have risen sharply, driven by global supply disruptions and geopolitical tensions. In some cases, fertiliser prices have surged dramatically, forcing farmers to either cut back usage or rethink cropping programs altogether.

At the same time, commodity prices in key sectors are softening, meaning the cost of production is increasing while returns are not keeping pace. The result is a squeeze on margins that is becoming increasingly difficult to absorb.

Layered on top of this is climate variability—drought in one season, floods in another—and the constant pressure of making decisions without certainty.

That constant uncertainty doesn’t just impact the business—it impacts the person.

The Invisible Load

For many in agriculture, stress isn’t just occasional—it’s cyclical. But in the current environment, it’s also compounding.

Rising debt levels, increasing land values, higher operating costs, and tighter cash flow are all adding pressure. Even strong, well-run businesses are feeling it. The margin for error is shrinking, and decisions carry more weight than ever before.

And then there’s the mental load of it all—the constant calculations, the “what ifs,” the responsibility not just to a business, but to a family, a legacy, and often a future generation.

What makes this even more complex is the isolation. Rural communities are tight-knit, but distances are vast, and access to services—especially mental health support—can be limited.

And farming is not just a job—it’s an identity. When things go wrong, it can feel deeply personal.

Why It Often Goes Unspoken

Despite these pressures, many farmers are reluctant to speak openly about mental health. There’s a culture of toughness in agriculture—getting on with the job, pushing through, not complaining.

But when economic pressure builds, that silence can become dangerous.

Recognising the Early Signs

Early warning signs might include:

– Withdrawal from social interactions or community activities
– Changes in mood—irritability, frustration, or persistent worry
– Difficulty sleeping or constant fatigue
– Loss of motivation or enjoyment in the work
– Increased reliance on alcohol or unhealthy coping mechanisms
– Talking about feeling overwhelmed, financially trapped, or hopeless

The Power of a Conversation

Sometimes, the most powerful support you can offer is simply being there. What matters is showing genuine care, listening without judgment, and creating space for someone to talk.

A simple “How are you going, really?” can open the door.

Looking After Your Own Wellbeing

Small, consistent actions can help:

– Talking openly about financial stress rather than carrying it alone
– Seeking advice early
– Staying connected with neighbours and community
– Taking breaks
– Keeping perspective

Knowing When to Seek Help

There are times when support from friends and family isn’t enough—and that’s okay.

In Australia, services like Lifeline Australia (13 11 14), Beyond Blue, and the National Centre for Farmer Health are available to support rural communities.

A Shared Responsibility

Mental health on the land isn’t just an individual issue—it’s a community one.

Farming has always been about managing risk. But behind every decision, there’s a person carrying that weight.

If there’s one message to take away, it’s this: check in. Start the conversation. Be willing to listen.

Because while seasons will always change, no one should have to carry the pressure of them alone.

With clients spanning from Goondiwindi, QLD, through to Adelaide, SA, we’re seeing consistent themes emerge across the agribusiness sector. While there is plenty of noise around fuel prices, fertiliser and interest rates, the primary driver of decision-making on the farm right now is seasonal conditions.

Dry conditions continue across northern and southern NSW, which is influencing key operational decisions, particularly for livestock producers. We’re seeing breeders being sold down and stocking rates reduced heading into winter. While parts of southern NSW received some late summer/ early autumn rainfall, conditions have since tightened again.

In contrast, parts of Victoria and South Australia are seeing improved conditions, which is supporting a more stable outlook in those regions. As always, seasonality remains the single biggest influence on confidence and decision-making across the sector.

Are people still borrowing?

The short answer is yes; however, behaviour is becoming more considered.

We are still seeing farm transactions being executed in certain regions, but alongside this, there has been a noticeable increase in clients looking to review their existing debt structures. In a more dynamic lending environment, ensuring finance is structured correctly has become just as important as accessing new debt.

At the larger end of the market, some clients are taking a more proactive approach. We’re seeing increased demand for pre-approvals ahead of potential acquisitions in late 2026 and into 2027. These clients recognise both the opportunity in the market and the time required to arrange and structure larger, more complex debt facilities.

Are our clients fixing or hedging their interest rates?

With the cost to fix rates currently sitting at a premium (generally 0.75%–1.25% above variable), many clients are choosing to remain on variable rates.

While there is some concern around short-term rate movements, there is also a view that a slower economic environment may see rates ease over the longer term. When combined with the flexibility that variable structures provide, this is influencing the decisions we’re seeing.

That said, there is no one-size-fits-all approach. Clients with higher leverage are more likely to hedge a portion of their exposure to manage risk, particularly where cash flow certainty is critical.

Are the banks being more cautious?

We are starting to see a shift in lender behaviour, with some banks taking a more conservative approach to new lending.

This is typical in periods of economic uncertainty. Small policy adjustments, whether in servicing, security, or structure, can have a meaningful impact on borrowing capacity and deal execution. These changes are subtle but important, and they reinforce the value of being well-prepared when approaching the market.

Historically, agriculture has performed strongly through downturns, particularly during periods such as the GFC and COVID. However, that doesn’t remove the need for well-structured, professionally presented finance in the current environment.

Are we still seeing off-farm investment?

Yes, although activity has levelled out.

We are still seeing enquiries from clients looking to invest in off-farm assets, particularly commercial property. However, higher input costs and increased interest rates are impacting the investment equation.

As a result, many clients are prioritising capital allocation back into their core operations, ensuring their existing business is well-positioned before pursuing external investments.

Top Three Succession Tips

1. Start early. Even simple guardrails can create clarity and direction. 
2. Ensure all key stakeholders are aligned from the outset. 
3. Don’t give up if progress is slow; these conversations take time.

Other interesting trends

1. We’ve seen a noticeable increase in purchases of secondhand equipment, driven by the rising cost of new machinery. Many clients are choosing to redirect capital into existing operations rather than upgrading equipment. 
2. Investment in on-farm infrastructure, particularly within livestock operations, remains strong, as producers focus on efficiency and long-term productivity.

To navigate this environment, having clarity around your financial position and a plan for the next 12–24 months is critical. Whether it’s reviewing your current lending structure, planning for working capital, or preparing for future opportunities, taking a proactive approach will place your business in a stronger position. At SproutAg, we’re continuing to work closely with clients to ensure they are well-structured, well-informed, and ready to act when the right opportunities arise.

On the second Tuesday of March, the Reserve Bank of Australia (RBA) lifted the cash rate by 0.25% to 4.10%. This marks the second consecutive increase, effectively clawing back almost all the reductions we saw last year.

While Australia did not raise rates as aggressively as some of our global peers in recent years, it is now one of the first developed economies to begin lifting rates again. This shows inflation in Australia has remained higher for longer than expected.

Inflation was already a key concern, and the current geopolitical conflict is now adding further pressure, particularly through rising oil and fuel prices. While no one knows how long the conflict will continue, the impact on fuel costs is already evident.

Fuel is a fundamental input across the entire economy. As prices rise, this flows through to the cost of goods and services more broadly, with increased input costs ultimately being passed on to consumers.

So, while inflation was already a challenge before the conflict, markets are now expecting further rate rises and a longer period of higher interest rates as a result of these added pressures.

Despite the RBA raising the cash rate to 4.10%, money markets are pricing in a rate of 4.50%. While forecasts for the cash rate range between 4.25% and 4.50%, some suggest it could move higher if global pressures persist. The reality is no one knows exactly where rates will peak, particularly given the ongoing geopolitical uncertainty.

What is more certain is that interest rates are likely to remain higher for longer, as inflation is still sitting above the RBA’s target range of 2–3%, and while it has eased, it remains elevated. Ongoing supply chain pressures and higher input costs may continue to keep inflation above target for some time.

For our clients, it’s important to consider not just the interest rate, but the structure and flexibility of your finance. As lending conditions tighten, it can become more difficult to refinance, change lenders or make structural changes to your finance, particularly in situations such as succession planning or asset sales. 

A key question we’re encouraging clients to consider is:

Where do you believe interest rates will peak, and how does your position hold up at that level?

How can you position your business?

If inputs continue to increase, it’s expected that there will be higher costs incurred by your business. To combat this, you may need to seek greater working capital, and short-term funding for your business. 

While most businesses complete a cashflow forecast, many are not reviewing it frequently enough to keep up with current conditions. What’s required now is a rolling, monthly forecast, that gives you a clear and current view of your cash position. A rolling forecast, means you are constantly resetting your outlook based on the latest information, giving you clear visibility on your cash position.

If you typically complete your annual budget in January, it should now be re-forecasted to reflect rising interest rates, higher input costs, and potential further increases.

From a planning perspective, every business should be:

1. Re-costing operations based on today’s prices
2. Running multiple scenarios, including higher cost environments
3. Building greater resilience into forecasts and decision-making

This should not be done in isolation. If you have a team, ensure those responsible for key cost areas are involved and accountable. In family businesses, it’s equally important that all stakeholders, particularly where succession planning or family payments are involved, understand the impact on cashflow and future capacity.

If your forecasting highlights a need for additional working capital, now is the time to discuss this with your debt adviser.

Communication is critical. If you anticipate pressure points, such as tighter cashflow in coming months, it’s far better to have that conversation now rather than waiting until it becomes urgent.

In a stable environment, fixing your interest rate often favours the bank. Typically, there is around a 0.75% difference between variable and fixed rates, meaning you are effectively betting that rates will rise beyond that margin.

Historically, there have only been a small number of windows where fixing made clear sense, notably leading into the GFC and again during COVID when rates were at record lows.

Based on current settings, choosing to fix today assumes that interest rates will rise materially from here. This brings us back to the key question:

Where do you believe interest rates will peak, and how does your position hold up at that level?

While there is uncertainty around interest rates, one consistent theme through previous cycles has been the resilience of the agricultural sector. During periods such as the GFC and COVID, farmland values held firm. Currently, livestock and wool prices remain strong, and if geopolitical pressures continue, we may also see support in grain markets such as wheat and barley.

Three Key Recommendations

1. Don’t panic

Large global shocks often feel worse than they play out. Stay measured and focus on what you can control.

2. Re-forecast your position

Introduce a rolling forecast into your business. Understand your cash position, test different scenarios, and plan for higher costs.

3. Communicate early and often

Strong communication is critical, within your business, with your family, and with your funder. If additional funding may be required, have that conversation early and put the right limits in place before you need them.

The current environment is uncertain, with inflation, interest rates and global events all influencing the outlook. However, the fundamentals remain the same.

Businesses that stay disciplined, maintain visibility over their cashflow, and communicate early will be best positioned to navigate the period ahead.

At SproutAg, our role is to help clients cut through the noise, make informed decisions, and position their business with confidence, not just for the next 12 months, but for the long term.

Banks generally lend on the three C’s:

1. Capacity (what you can borrow
2. Collateral (your security position)
3. Character (who you are)

Although this message will focus on your borrowing power, or in bank language, “capacity”, it’s important to remember that if there are any issues with your character, then it doesn’t matter about doing the calculations around your borrowing power. 

What impacts Character and how it’s assessed by the Bank?

1. ATO arrears
2. Excesses on Bank accounts
3. Arrears on Bank accounts
4. Defaults from providers
5. Court actions
6. Banks will Google you.
7. Some Banks complete Police checks
8. What has this person accomplished
9. Do they have a trading history
10. Are they capable of executing what they want to achieve
11. Do they have a history in the industry
12. Overall experience

So, Why is Borrowing Power Important?  

There are two key fundamental parts of your business that determine Borrowing Power.

1. Cashflow Forecast.
2. Business Plan. Your Year in Year out or Annualised Cashflow (this is the most important item in Australian Agribusiness Banking, and almost all the Banks are similar in what this is.

What should be in my Business Plan (for Bank purposes)

Put simply, it is where your business is going to be in three to five years’ time, based on an average year. So, if you have a livestock breeding enterprise and you are building up your breeder numbers, you will base your revenue in your business plan on where your numbers will be in three to five years’ time. Similarly, if you are in a cropping enterprise and you are a developing country, then it should reflect the arable area in three to five years. 

The same process then applies to expenses (both operating and living expenses). There may be one-off expenses in your business from the last 12 months or even projected for the next twelve months. These one-off expenses should not be included, as the banks wish to see a projection of average expenses and where they’ll be in three to five years’ time. 

So, revenue minus operating expenses minus living expenses gives your free cash flow or what is available for servicing debt.

When projecting your revenue and expenses, take a slightly conservative view of where your business will be in three to five years’ time (or based on an average year, rather than a really bad or really good year).

Once your cash flow has been forecasted out, the next step is to allocate your debt repayments. Naturally, banks want to make sure you can service the debt, particularly if interest rates increase. So, using a higher interest rate (usually 2% higher than the current market), banks determine if you’ll still be able to service the loan over 15-20 years. 

This is an important point, as banks vary in how they allocate loan servicing. For banks that amortise over a shorter period, you generally need a stronger business plan to meet their criteria (for more information, please contact your Sprout Ag advisor). 

To Summarise, your borrowing power is determined by revenue – operating expenses – living expenses – cost of debt (your debt amortised over 15-20 years with a higher rate), and if you have a surplus based on this or in technical terms, after principal and interest sensitised, this may be regarded as a loan that can be serviced. There are some instances where banks look for an interest coverage ratio or some look for a surplus of 1.2 times; this is a good guide to start with. 

For a deeper understanding of what banks are looking for and which one will suit your needs, contact your SproutAg advisor for a one-on-one conversation.   

Many of our clients are approaching a crossroads, where they are starting to ‘cap out’ with their current management team. The management team is often made up of the husband and wife, and possibly one or two more junior members of that operation. However, the husband and wife are still having to do most of the thinking and the work.

This is usually a result of them not having hired a capable, senior member with the right capabilities to lead the team. Or it can be a result of not having the right systems in place to be able to lead a more senior person and set them up for a leadership role.

Often, farming owners and leaders see hiring a senior staff member as an expensive exercise, not only from a time perspective to recruit the right person, but also the added cost of remuneration that comes with the responsibility.

Investing in infrastructure such as fencing, livestock handling facilities, and upgraded machinery or technology can make a farm more efficient. But efficiency alone doesn’t create growth. Growth requires people. When it comes time to expand into other enterprises, having someone accountable for operations allows you to step away from the day-to-day and focus on the bigger picture.

To really expand an operation and still be present for your family, having good people around you who can take on additional responsibility in your business is a key element. If you are constantly holding your manager’s hand, and they’re unable to handle the pressure of the business, then you’ll struggle to scale and grow your business.

Top Four Tips

Allocate the Time

This is a crucial component in your business. Dedicate the time to finding the right person. Don’t just rely on putting an advertisement up to find the right person. Meet with people on a regular basis and build your talent bench. If you don’t have the time, hire a strategic recruiter who will sit down with you to understand the business, the business’s needs, and the type of person you want and strategically select talent.

Managing yourself

Most farming owners and leaders are perfectionists, and all have a particular way of carrying out tasks. The reality is that not everything is going to be done the same way you’d approach it. There’s value in giving a manager the autonomy to complete a task their way, and you never know, they might have a more efficient approach that you choose to adopt. As a leader in your operation, it’s important to know when to let go and when to step in and provide guidance.

Manuals/ Inductions/ First Six months

When onboarding a new manager, it’s important to set up a program that maps out what success looks like. Set the expectations early and check in on a regular basis to provide an opportunity for learning and guidance. Take the time to understand what responsibilities they would like to take on and tailor a plan around this to suit your operations’ needs.

Structure

People like structure, and they like to have clear direction from the leader. Often, farming businesses are chaotic, and they are constantly changing, but having time set aside for weekly, daily and monthly meetings helps. Every business is busy, but unless you set the structure up early and make it work, it won’t happen. Having the ability to constantly debrief and provide feedback in the right way is critical to setting up a manager or team for success.

Taking the time out of your business to recruit a capable manager to take on responsibility can create opportunity and open doors for expansion. The wrong hire can cost a business, so taking the time to recruit and invest in the right people is just as important as investing in infrastructure.

Aligning ownership in a family farming business

A key element of every transition plan is aligning the family business’s ownership goals. Ownership of assets is often the hardest agenda item for families to work through.

Farming businesses are now more complex than ever, with higher asset levels, higher debt levels and more family members involved across generations. Completing a successful transition takes deliberate time out of the day-to-day, and almost always requires structured conversations with family members involved. 

What we consistently see as advisers is that families often get 80% of the way through their plan, but as business pressures take over, the final 20% is left unresolved. That last portion is where the strategy comes together, where clarity is established, and where future conflict is avoided. When it’s left incomplete, unresolved decisions and unspoken feelings can create significant issues down the track.

How do we align Ownership and Assets Goals?

1. Current Family Leaders and Their Core Values

It’s important that the current leaders, owners, shareholders, partners, and/or directors first understand what they want. Every family is different, and at SproutAg we know that the values that shape a family come from upbringing, history of the farm, how the business formed, and the experiences of each leader (often Mum or Dad). These values are what guide ownership decisions.

These core values can be the driver around asset ownership into the future, and while there is no right or wrong answer, the existing leaders typically determine the asset allocation. 

2. Understanding Individual Financial Circumstances

Individual financial circumstances are also a key driver when aligning ownership and asset goals. 

Key questions almost always include:

1. What do Mum and Dad need if they step away from the business?
2. Is the farm financially sustainable in the future?
3. What level of debt can the business genuinely support?
4. What is a fair level of financial support for non-farming family members?

These questions help shape what is possible and what is practical.

3. No One Approach 

There is no secret recipe for the above; however, when all the stakeholders are considered carefully and thoughtfully, a workable direction usually becomes evident.

4. Include Non-Working Family Members

Their needs matter too. It’s important to consult and understand the needs and requirements of non-working family members. 

5. Farm Viability 

If the goal is to keep the farm, the numbers must stack up. If a family wishes to retain the farm, it needs to be viable into the future.  

If You’re a Family Leader, How Can You Get Started?

Take the time to sit down with your partner to map out your assets and what is important to both of you. 

Consider how you’ll feel later in life and what would be a satisfactory lifestyle? 

Ask the key question: Do we want to keep the farming business?

There is no correct answer, but if the response is yes, it often means financial outcomes between siblings will not be equal, and that’s where guided conversation becomes essential. 

For more information about Succession Planning, and getting the conversation started, contact us today. 

Have you ever had a conversation with a colleague, mate or even your neighbour, only to hear that they’ve found a better loan rate than you? 

Inconsistency in loan rates in agriculture is something we regularly see. At Sprout Agribusiness, we’re in a unique and fortunate position to be tendering out loans on a regular basis, so we have a sound understanding of where pricing should be. As a general rule, there are three factors that hold significant influence on a bank’s pricing.

1. Pricing that is driven by the cost of funding, that is driven by each bank’s exposure and reliance on deposits, wholesale funding and other funding requirements. 
2. Rates set by the RBA
3. Risk to the bank, and the probability of default, acknowledging that everyone is on a different risk margin. 

While securing a competitive price is a desirable outcome for anyone seeking a new loan for a farming business, it’s crucial to ensure that the bank you choose and the structure of your facility are aligned with your future growth. 

At SproutAg, we believe it’s essential to evaluate your pricing options to ensure your loyalty to your bank isn’t costing you money. When providing clients with a rate, banks add a risk margin to the base rate, which influences what you pay.  Our Bank Loyalty Tax Graph is an estimate of the price of loyalty to your bank. 

Inconsistency in rates also stems further than the three key factors, it also boils down to individual bank managers, and how they’re tracking against their budgets. A manager’s targets, profit and loss or revenue can all affect the rate you’re quoted. As an example, we can have the same client with the same risk grade looking at a 1.5% difference between individual branches within the same bank.

Top tips for how you get the best rate:

1. Be organised and properly tender out your business. Don’t just ask your existing bank for a rate reduction. 
2. Tender out your banking at least every three years. 
3. Prepare and provide the best information possible. To do this, make sure you check out our Finance Ready Check List.

By making the time and effort to get your banking right, you might just see your best pay day yet!

At SproutAg, we’re lucky to work with over 2,000 clients and regularly connect with agribusiness leaders across the country. This gives us unique insight into what really drives growth in family farming businesses.

First and foremost – get aligned.

The most important starting point? Ensuring the directors, partners, or current owners are aligned in their thinking around growth. When alignment isn’t there, the business often works hard but spins in circles. You might have a few extra dollars in the bank in ten years, but your asset base, business performance, or personal goals may not have moved much at all.

How do you know you’re aligned? Ask the simple questions:

• Where do you want to live in ten years?

• How do you want to spend your time?

• What are your key personal and business drivers?

• What role would you like to play in the business going forward?

It’s okay if you’re not 100% sure on all the answers, what matters is understanding each other’s priorities and identifying the common ground. If you’re not on the same page, you won’t move forward in the same direction.

Make the time to have these conversations.

We know how busy farm life is. Between the business, the family, and everything in between, time is short. But if you’re serious about growth, step one is setting aside time away from the day-to-day to work on the business, without distractions.

Then, put numbers around the plan.

Every goal needs a financial engine behind it. Growth often means investment, and opportunity, especially if you’re thinking about the next generation.

Start asking:

• Where do we need to be in 3 years to reach our long-term goals?
  
• What would our first steps be?
  
• What shape does our cash flow need to be in to make this work?
  
• What role do I need to play in that?
  
• Can we actually fund our ideas, or do we need to adjust?

A cashflow forecast is essential. Growth needs cash, and good planning helps ensure you don’t run out when you need it most.

Ongoing improvement is key.

Growth isn’t just about bigger numbers – it often means refining how you run the business, reviewing key processes, and continually improving performance. Regular deep dives into each area of the business are critical to staying on track.

What does a simple growth plan look like?

1. Carve out time to work on the business – regularly.
   
2. Align on your long-term personal and business goals.
   
3. Set 3-year targets to bridge the gap.
   
4. Check the cashflow – can you fund the plan?
   
5. Work on the business – not just in it.
   
6. Review and adjust regularly.
   

And just like that, you’ve built the foundations of a 10-year growth plan.

Need support to make it happen?

At SproutAg, we offer a one-on-one growth program called AgPro, tailored to your unique goals. We walk alongside you to create and implement a personalised strategy that supports real, sustainable growth in both your business and your life.

We’re proud to work with some of the best in the industry and look forward to helping you shape the next decade of your business journey.

Ready to grow? Get in touch with the team at SproutAg.

As we settle into Spring, the number of enquiries for livestock finance generally increases. With the end of winter cropping becoming more predictable and the prospect of a good season on the horizon, many graziers look to take advantage of the feed available. In addition to this, we traditionally see that livestock markets are stronger in the Spring and coming into Summer in comparison to crop commodities. 

We understand that the cost of running a farm or any business is high, and that it’s important to take advantage of opportunities when they present themselves. This is true for obtaining livestock finance to take advantage of the available feed as we move into a prosperous season, which can result in a profitable outcome. 

At SproutAg, we understand that profitability in a livestock business is made when you buy at the right time and for the right price, and this is made possible when your finances are prepared in advance. 

There are four main options when looking to raise livestock finance, and there are pros and cons to each.

1. Dedicated livestock financier.
2. Stock and station agent.
3. Main bank financing.
4. Cash in the bank.

*The following commentary is general in nature and does not take into consideration personal business circumstances.

 

Dedicated Livestock Financier

Pros

• Quicker turnarounds.
• Dedicated facility.
• Easier to get approved.
• Frees up security for the main bank.

Cons

• Higher interest rates at 12-14%.
• It can be complicated from an ownership perspective.
• 12-month term only at times.
• Right to mortgage parameters in documents.

 

Stock and Station Agent

Pros

• Easy to get approval.
• Dedicated facility.
• Frees up security for the main Bank.

Cons

• Have to market stock through an agent.
• 12%+ interest rates.
• Funding can be unpredictable and based on the agency’s own cash flow.

 

Main Bank

Pros

• Cheaper rates of 5.50-6.50%
• Cleaner with one financier.

Cons

• May use valuable land security.
• It can be more restrictive, and the bank may not be able to use security.
• May not be able to access.

 

Cash

Pros

• Easy to access.
• No interest rate unless out of your own overdraft/ term loan.

Cons

• Does this impact other parts of the business?
• Is the cash required in the future for the business?

 

Want to understand your risk and get support – reach out to the Sprout Team!

Can I Get a Home Loan as a Business Owner? Here’s What You Need to Know

Running a business can offer flexibility and freedom, but when it comes to applying for a home loan, it can also come with a few extra hurdles.

At Sprout, one of the most common questions we hear from self-employed clients is:

“My accountant helps me reduce tax, will that hurt my chances of getting a home loan?”

The short answer? It might.

But with a little forward planning and the right advice, getting a loan as a business owner is absolutely possible.

Here’s what to keep in mind when reviewing your profit and loss, tax returns, and planning for personal lending, like a home loan or residential investment.

1. Be Upfront With Your Accountant About Your Lending Goals

It’s standard practice for accountants to help reduce your taxable income by writing off expenses and reinvesting into your business. But if your business shows little to no profit, most banks and lenders will view your income as low or unreliable.

If you’re considering buying a home or investing in property, let your accountant know early. Distributing more profit to yourself, on paper, can make a significant difference when applying for personal lending.

2. Lenders Will Look at Your Tax Returns, Not Just Your Business Reports

When you apply for a home loan as a business owner, lenders will request:

• Your personal tax returns
• Your Notice of Assessments (from the ATO)

These documents are used to verify your actual income. While your business’s profit and loss statement or balance sheet can provide helpful context, they aren’t the primary documents used for loan assessment.

3. What If I Pay Myself a Wage?

Depending on how your business is structured, you may be able to use your wages in a home loan application.

However, in most cases, lenders will still want to see the full business tax return, especially if your wage isn’t stable or represents only part of your income.

4. Getting a Home Loan for a House on a Farm

If you’re living on a rural property or part of a farm, the bank will need to do a property valuation. This is completed by an independent valuer arranged by the lender, and usually involves a full on-site inspection.

The valuation will consider land zoning, infrastructure, and whether it’s a working farm or a rural residential block. The clearer the residential portion is from any farming activity, the more straightforward the lending process will be.

5. What’s the Maximum Acreage a Lender Will Approve?

Some lenders are happy to finance rural residential properties up to 240 acres, depending on:

• The zoning of the land
• Location and infrastructure
• Your deposit size
• Whether the property passes the bank’s rural residential criteria

It’s worth noting: these approvals can vary significantly between lenders, so working with a broker who understands rural lending is key.

6. Can I Use My Farm as Security for Another Property?

Unfortunately, no commercial or farming land usually can’t be used as security for residential lending. If you’re looking to buy an investment property and don’t want to use cash from your business, you’ll need to use equity in a residential asset or contribute a cash deposit from your personal funds.

7. Is Interest-Only Lending Still an Option?

Yes, but only for investment properties, not for owner-occupied homes.

Interest-only loans can help manage cash flow, especially in the early stages of building a property portfolio. They aren’t suitable for everyone, so you must chat with your accountant before making the switch.

8. Building a Residential Property Portfolio: What You’ll Need

Here’s a high-level snapshot of what investing in residential property could look like:

• Deposit required: Minimum of 10% (20% to avoid Lenders Mortgage Insurance)
• Average investment loan interest rate: 6.10%- 6.60%
• Loan example: $400K loan = approx. $2,518/month repayments (P&I)
• Rental return: Around $380–$400 per week (based on average market figures)

With current rates, most residential investment properties are negatively geared, meaning they cost more than they earn, but this can provide tax benefits depending on your situation.

Takeaway: It All Comes Down to Planning

Getting a home loan as a business owner isn’t as simple as it is for salaried employees, but it’s completely achievable with the right advice.

✔️ Keep your financials clean and up to date

✔️ Involve your accountant early if you’re planning to borrow

✔️ Work with a broker who understands self-employed and rural lending

At Sprout, we specialise in supporting business owners and farmers through personal lending. If you’re looking to buy a home, invest in property, or just want to understand your options, we’re here to help.

Let’s talk about finance that fits your future.