Agriculture - Government-backed loans: research

Government-backed Loans

Foreword by Henry Graham (Chair of the Farming Opportunities for New Entrants (FONE) group)

Bringing new people into farming and crofting is vital for the future of Scotland’s rural economy. Yet for many aspiring farmers and crofters, the path into the industry remains challenging. Rising land prices, fewer tenancy opportunities and difficulties in accessing finance all create real barriers for those starting out. These pressures are well recognised across Scotland and more widely in Europe and there is a growing need for clearer evidence on what kinds of financial support could genuinely help new entrants take their first steps.

This piece of work came about after a direct request from members of the Farming Opportunities for New Entrants (FONE) group, who highlighted the lack of detailed analysis on loan‑based support for new and young entrants in Scotland. I’m glad we were able to pick up that request and turn it into this report. While the Scottish Government has experience with grant support, there has been little exploration of how loan schemes, whether fully private, government‑backed, or hybrid models, operate elsewhere and what lessons could be useful here. This report begins to fill that gap.

Rather than recommending any specific model, the research looks across a range of financial approaches used internationally and in different sectors. It considers how these schemes work in practice, what helps them succeed and what new and young entrants in Scotland, both farmers and crofters, might need from any future financial product. The report also brings together insights from stakeholders who generously shared their time and experience, offering candid reflections on both the opportunities and the hurdles involved in creating new finance options.

I want to extend my sincere thanks to all participants for their open, constructive and proactive engagement throughout the interviews and discussions. Their contributions have added real depth and practical understanding to this work.

I would also like to thank FONE members for raising this issue and for their continued engagement; SRUC for leading the research; Scottish Government colleagues in the Agriculture Policy Division and Rural Economy, Science and Analytical Services (RESAS) for their support; and Scottish Ministers for their ongoing interest in improving opportunities for new and young entrants. Their combined efforts reflect a shared commitment to ensuring that farming and crofting remain accessible and welcoming to the next generation.

Government-backed Loans

This report was funded by the Scottish Government Underpinning National Capacity Support for Policy as part of the Scottish Government Environment, Natural Resources and Agriculture 2022-2027 Strategic Research Programme.

Acknowledgements: Thank you to everyone who engaged with this project. We would particularly like to thank everyone who was interviewed and provided comments on this report.