Banks are narrowing, but options are widening. Learn how smart transitional finance is reshaping farming opportunities.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Having spent most of my career in Rural Finance with a major New Zealand bank, I was firmly of the view the best way to fund a farming business was through a mix of bank debt and farmer equity. While I had some exposure to alternative capital sources, they were rarely used, typically reserved for distressed assets or situations where traditional funding wasn’t available.

Growing up on a farm, I always had a strong desire to own one myself. This goal sparked a deep interest in understanding the financial pathways to farm ownership and helping others do the same. Supporting farmers achieve their business and family goals became the most rewarding part of my banking career.

However, as bank regulations tightened and risk appetites narrowed, I became increasingly frustrated by the inability to support clients with strong growth plans that didn’t fit the bank’s criteria. Stepping away from banking five years ago gave me the opportunity to help farmers raise equity and explore new funding options. Since joining NZAB 18 months ago, I’ve focused on helping farmers access alternative capital, what we often refer to as transitional debt, to support growth and succession in ways traditional banking can’t always accommodate.

It’s worth noting that most of what NZAB does is still with the main banks. But increasingly, farmers are demanding other forms of capital that banks can’t or won’t provide under today’s regulatory settings.

This experience has opened my eyes to the value and opportunity that transitional capital brings to New Zealand agribusinesses.

What Is Transitional Debt Capital?

Transitional debt capital is short to medium-term funding designed to support farming businesses through periods of change, whether it’s expansion, succession, diversification, or recovery. It’s more flexible than traditional bank lending and can be tailored to suit the unique timing and cash flow of a farming operation. It’s important to note transitional capital is not necessarily about distressed situations, many farmers have strong growth plans that sit outside current bank appetite can and use these options successfully.

Why It’s Valuable in Today’s Banking Environment

Many farmers are finding that their businesses no longer fit within the increasingly narrow criteria of mainstream banks. In fact, many of these transactions are the type of lending that banks traditionally supported, but capital regulations now limit their ability. Whether it’s tighter debt servicing ratios, sector exposure limits, or strategic shifts, traditional lenders may not support the next phase of a farm’s journey, even when the strategy is sound.

Creating a strategic advantage in today's Rural Property market.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

In the agribusiness world, Spring is far more than just a change of season - it marks a period of opportunity in New Zealand’s Rural Property market. Decisions are made to expand operations, purchase new land or restructure business assets. Yet the difference between seizing an opportunity and missing out, often comes down to preparation.

Chatter around the traps suggests this Spring is set to be one of the hottest in recent times, with strong commodity prices, interest rates trending down, and a strong flow of capital into New Zealand agriculture.

‘Bank Ready’ = Market Ready

The ‘Bank Ready’ concept isn’t just about ticking boxes with your bank. It’s about positioning yourself to act with confidence and feel in control of the finance and property purchase process. Lenders are looking for a clear and a well thought out approach to finance application that aligns with your strategy.

We hear and talk about the concept of ‘Bank Ready’, but what does that mean?

I’ve broken this down into three key principles.

1. Knowing your business position gives you confidence to execute

'Bank Ready' farmers and growers who understand not only their financial position but also their risk profile, cashflow position and how it fits within their long-term strategy have the best chance of success in getting competitive debt capital the first time.

It’s not just about today’s balance sheet - it’s about knowing what could go wrong, what contingencies you have, and how you’d respond. Banks stress-test deals. The more context you give around “what if” scenarios, the more confidence they’ll have in your resilience.

Borrowing capacity is another critical factor. Don’t leave this in your bank’s hands; know exactly how they view your position and how much you can borrow. That knowledge gives you leverage, pre-approvals, and the confidence to execute quickly.

This is also the time to ensure you’ve got funding headroom. Expansion is exciting, but it’s vital to raise additional capital while you’re strong - not when the cycle turns. Going in “skinny” leaves no buffer for volatility.

2. Bank Alignment

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

In farming, opportunities and challenges rarely come at the “perfect” time. A neighbouring block comes up for sale when your equity is stretched. Growth beckons, but the bank says no. Or, on the flip side, pressure mounts from a current lender and selling up feels inevitable.

At NZAB, we see these stories all the time. And while, on the surface, the situation might feel impossible - too far out of reach, too much pressure, not enough support - we’ve learned that with the right approach, there’s nearly always a pathway forward.

1. When Growth Seems Too Big to Grasp

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

The Finance and Expenditure Committee has now delivered its "Final Report on Banking Competition". It follows last year’s Commerce Commission market study into personal banking, but this time the net was cast wider — rural banking, business lending, and Māori access to capital were all explicitly included.

At NZAB, we’ve been deeply engaged in this process. We made a formal submission to the Committee, we wrote openly about why we thought the inquiry was asking the wrong questions, and we’ve published widely on the reality of farm lending margins in New Zealand. So when the report landed, we asked the obvious question: did it deliver?

The answer is a mixed one. There’s some progress — in fact, several of the recommendations mirror what we called for. But there are also gaps, missed opportunities, and the lingering sense that, once again, farmers may not see any real change. At the end of this article we also discuss the most important takeaway for farmers.

NZAB's Role in Enabling the Next Generation of Farm Owners

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Helping hard working young kiwis purchase their first farm is one of the most meaningful and rewarding parts of our work. These transactions are never just about numbers, they’re about backing ambition, building trust, and crafting smart, sustainable pathways to ownership. Over the past 12 months, the NZAB Canterbury/Upper South Island team have had the privilege of advising on several successful first farm purchases, each with their own unique challenges and creative solutions. In my view there were three outcomes that were truly rewarding. I wanted to share these stories because I believe they show what is possible in a market that is perceived as impossible.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

For me, it has always been about value—creating it, delivering it, and living by it. The opportunity to be my best self and provide genuine value to my clients is what drives me professionally. I’ve long believed in being on the value side of the equation, where the focus is not just on transactions but on meaningful impact. This belief has shaped my approach to enable clients to grow and thrive.

However, delivering value isn’t always straightforward. During my time working at a bank, I found this especially challenging. Banks excel at their core function—lending money whilst minimising risk, but the process of putting a deal together often felt like a complex dance happening behind the scenes. By the time a deal reached the bank, the real work—the strategic thinking, the relationship-building, the breakthrough moments—had already happened. I was there, but only on the sidelines, watching the value unfold without being able to fully contribute to it.

This experience taught me that true value delivery requires more than just being present—it demands active involvement, commercial insight, and the freedom to help shape outcomes. It’s about being part of the solution, not just an observer once the heavy lifting is done. That’s why I’ve sought roles and environments where I can engage deeply with clients, understand their needs, and co-create solutions that make a real difference.

As bankers, we used to be able to roll up our sleeves and work alongside farmers—not just on the numbers, but on the strategy. We were close to the business, involved in the big decisions, and often played a quiet but critical role in helping farming families move forward. But over time, that changed. Compliance, regulation, and mounting internal workloads meant we had to step back. The job became more about managing risk than enabling progress. And as that gap grew, so did my desire to get back to the part of the work I truly loved—being a hands-on partner in the growth of great businesses.

Ultimately, value is not just a concept—it’s a commitment over time. It’s the promise to show up, to contribute meaningfully, and to do it time and time again. It’s the belief that when we bring our best selves to the table, we unlock the potential to create something truly impactful with the families that we work with.

I saw NZAB in action, and I knew I wanted to be part of it.

When looking for like-minded organisations, NZAB stood out. Value wasn’t just a concept—it was being delivered, consistently and tangibly. I saw alignment not only in philosophy but in action.

NZAB was out there, making a real difference for clients. Joining the team meant stepping into a space where meaningful impact is the norm, not the exception. It’s about being present with purpose, contributing fully, and being part of something that genuinely transforms client outcomes.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Commodity prices are lifting. Farmgate returns are improving. And since mid-2024 the Reserve Bank has aggressively cut the OCR from 5.5% to 3.25%.

So why does the economy still feel like it’s stuck in neutral?

This one graph explains it.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

There’s been a lot of talk lately about why New Zealand should be more like Denmark. So, I went and did some research to find out why.

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

Succession is back in the headlines—and this time it's louder than ever. As Rabobank NZ CEO Todd Charteris emphasised recently, “succession is not a moment in time – it’s a process that takes years of planning, conversation and adaptation”. 

 Meanwhile, Agri Undergraduate Georgia Checkley – writing an opinion piece in the Farmers Weekly from the perspective of a young farmer rightly warns that “without clear succession plans nationwide we look to see a decline in productivity across the agriculture sector” 

The data reveals the urgency: 23% of families have a well thought out succession plan for the farm, 17% have spoken of the topic and  50% of families have not even mentioned succession.

With over $150 billion in farm assets set to transfer in the coming decade, the stakes couldn’t be higher. 

Too often, succession is framed as a single event or a handover moment. In reality, it’s a strategic process that starts years in advance.

We wrote this article “If You’re Thinking About Succession, Start by Redefining It” – a few years ago as a framework for how NZAB helps their farmers in this space, and it's become even more relevant today - so please make some time to read it. 

We see succession not as a single transaction, but a multi-year journey which starts with creating a strong business in the first instance. The article reshapes the narrative around four vital shifts:

1. Redefine succession as building a great business

Succession isn't just about dividing assets—it's about building a high-performing, value-driven business that the next generation wants to be part of. A great business naturally attracts family engagement, capital, and talent. Start here, not with spreadsheets.

2. Purpose, vision, and strategy comes first

Successful intergenerational farms start with a clear “why,” a compelling vision, and a simple, focused strategy. This clarity unites the family, aligns decisions, and gives everyone from shareholders to staff a reason to buy-in.

3. Set the business up to perform, then structure it around this

Strong operating performance, clear roles, and a future-facing organisational structure makes a farm business investable and sustainable. Succession planning should grow from this foundation not the other way around.

4. Get independent help and make it continuous

This isn’t a one-off event, it’s an evolving strategic process that needs independent facilitation. Bring in outside expertise, embed succession into regular governance, and treat it as a standing agenda item and not a retirement trigger.

After you’ve read the article, drop us a line for a no obligation chat.  Feel free to call one of our local team members in Southland, Canterbury, Manawatu, Taranaki or Waikato  (or flick us a quick email here)

NZAB helps farming families build businesses worth succeeding into. We combine financial insight, strategy, and governance experience to support multi-generational transitions that work. If you're thinking about succession, let’s talk about making your farm business one the next generation wants to run—not just inherit.   

Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

In our previous article, What a Decade of Floating Rates Tells Us About Agri Finance Confidence, we explored how floating interest rates have behaved over time and how bank appetite has shifted in response to rising rates. The core message was this: while interest rates have moved in cycles, the bigger issue has been how confidence—both from banks and farmers—has fluctuated alongside them.

Now, we want to take that discussion a step further.

Same graph. One big addition.

This time, we’ve layered in a second line—the red one. This represents the non-competitive floating rate, or in plain terms, the rate paid by a farmer whose credit wasn’t quite as good (or wasn’t articulated well enough) and hasn't actively engaged in a competitive lending process. It’s someone who, for whatever reason, hasn't negotiated, hasn’t benchmarked, and hasn’t brought an advocate like NZAB to the table.

The green line, as before, is the competitive rate—what’s available when a farmer actively shops their deal, presents a strong case, and gets support to navigate the lending environment.