Quick answer
If a poor harvest means you can't meet a seasonal or annual machinery repayment, contact your lender before the due date, not after. Bring updated figures showing what happened and what the next season looks like. Lenders can sometimes defer, restructure or extend repayments. Free rural financial counselling can help you prepare, and refinancing or property-secured funding may cover the gap if the lender won't move.
Key points
- Call the lender before the repayment date; options shrink once it's missed.
- Bring production figures, a cash flow budget and a realistic plan for next season.
- The Rural Financial Counselling Service is free and can help you negotiate with lenders.
- Farm Management Deposits held for this purpose may be accessible, with tax consequences.
- Refinancing or property-secured funding can bridge a one-off shortfall.
If a bad season means you can’t meet a seasonal or annual machinery repayment, ring your lender before it falls due. Have updated figures showing what happened and what next season looks like. Many lenders can defer, restructure or extend a repayment for a genuine seasonal shortfall, and free rural financial counselling can help you prepare.
Seasonal repayments are one of the best features of agricultural machinery finance. Instead of paying monthly through the dry months, you pay after harvest, after the wool cheque or after the cattle sale. The catch is that the whole year’s obligation can land in one payment, and when the season fails, that single payment can look impossible. Here’s how to handle it, in the order that gives you the most options.
Why does timing matter so much?
Lenders have far more flexibility before a repayment is missed than after. Once a payment is overdue, the loan is in arrears, default fees and interest may start, and the account may be reported. Each of those makes later options harder.
Business.gov.au’s advice on managing debt puts it simply: speaking to creditors early can prevent late penalties and calls from collectors. For a seasonal machinery loan, “early” means as soon as you know the crop, clip or sale won’t cover it, not the week of the due date.
What should you prepare before you call the lender?
The more clearly you can show what happened and why next year will be different, the better your chances. Prepare:
| What to bring | Why it helps |
|---|---|
| This season’s actual production and prices | Shows the size of the shortfall and the cause |
| Previous three to five seasons’ figures | Shows this is a bad year, not a trend |
| Updated cash flow budget to next harvest | Shows what you can realistically pay and when |
| Current debts and other repayments | Gives the whole picture, not just one loan |
| Planting, stocking or contract plans for next season | Shows the path back to normal income |
| Any insurance or assistance claims in progress | Shows money that may be coming |
Keep the request specific. “Can we defer half of this year’s payment to next harvest and extend the term by a year?” is easier to say yes to than “We can’t pay.”
What options might a lender offer?
Every lender is different, and nothing is guaranteed, but common responses to a genuine seasonal shortfall include:
- Deferral. Moving part or all of this payment to a later date.
- Spreading. Adding the missed amount to later instalments.
- Term extension. Lengthening the loan so each payment is smaller.
- Temporary change of frequency. Switching to smaller quarterly or monthly payments for a period.
- Interest-only for a period. Paying interest only while the farm recovers.
Ask what each option costs over the life of the loan and how it affects your credit file. Get any agreement in writing.
If your lender can’t help, or you want to see what else is possible, you can enquire here. There’s no credit check at that stage, and a real person will look at the whole farm, not just the overdue amount.
Where can farmers get free help?
Many farmers don’t know about this. The Rural Financial Counselling Service, funded by the Department of Agriculture, Fisheries and Forestry, offers free and confidential support from qualified rural financial counsellors to eligible farmers, fishers, foresters and small related businesses facing or at risk of hardship.
Counsellors can help you build budgets and cash flows, develop an action plan, negotiate with lenders, and find other government assistance such as Farm Household Allowance. They don’t sell products or give financial product advice, which makes them a useful independent voice at the table. The national number is 1300 771 741.
Can a Farm Management Deposit help?
If you’ve built up Farm Management Deposits, this is the kind of year they’re designed for. A few rules from the ATO’s farm management deposits scheme page are worth knowing:
- Withdrawals are assessable income in the year you take them out.
- Withdrawals within 12 months of depositing generally can’t be deducted, but there are exceptions, including where your land is in an area affected by severe rainfall deficiency and the deposit has been held at least six months.
- FMDs can’t be used as security for a loan, although some can be linked to an offset arrangement for primary production debt.
Talk to your accountant before withdrawing, because the timing affects your tax.
What if the lender won’t move?
If the lender says no, you still have options:
- Refinance the machine with another lender on a structure that fits your income better.
- Bridge the shortfall with a property-secured business loan. Property-secured loans run from $20k to $5m against residential or commercial property, and can cover a one-off gap until next harvest.
- Release cash from other gear through a sale and leaseback on machinery you own outright.
- Sell and downsize if the farm can manage with a smaller machine or contractors. See our guide to selling a financed truck or machine.
Whichever route, the aim is the same: a plan that gets you to next season without stacking up problems for the one after.
How do you set future repayments so this doesn’t happen again?
A bad season often reveals that the original repayment structure was built for an average year, with no room for a poor one. When you restructure, or when you finance your next machine, it’s worth building in resilience.
Questions worth asking:
- Is one annual payment the right shape? Splitting into two payments, timed to different income streams, can soften the blow if one fails.
- Is the term long enough? A slightly longer term lowers each payment, at the cost of more interest overall.
- Is there a balloon? A large final payment on a header or tractor adds risk if seasons turn.
- Does the budget assume a good year? Lenders and farmers alike should test repayments against a below-average season.
- Is there a backstop? Farm Management Deposits, an undrawn facility or equity in property give you options before you need them.
Our agricultural machinery finance page explains how seasonal structures are set up, the seasonal business loans page covers funding for uneven income more broadly, and the farm business loan page covers the wider farm picture.
Illustrative example: a cropping farm after a failed spring
Illustrative only. A family cropping operation financed a header with annual repayments due after harvest. A dry spring cut yields sharply, and the farm will be about $60k short of this year’s repayment.
Two months before the due date, the family contacts a rural financial counsellor, who helps prepare a cash flow to next harvest and a five-year production summary showing this is the first bad year in four. With that in hand, they ask the lender to defer half the payment to next harvest and extend the term by a year. The lender agrees, documented in writing. The family also lines up a property-secured facility as a backstop in case the next season disappoints too.
A tough season doesn’t have to cost you the machine
Farming has bad years, and lenders who understand agriculture know it. What they need to see is a farmer who’s on top of the numbers and talking early.
If you’d like help mapping out the best route, the enquiry takes roughly 60 seconds and comes with no credit check at the start. We don’t scatter your details across a pile of lenders, so there’s no barrage of calls in an already hard season. A real person looks at the farm’s situation and gets back to you by phone. Please give accurate figures, including the repayment amount and due date, so the first option we raise is a workable one.
Frequently asked questions
What happens if I miss an annual machinery repayment?
Missing it usually puts the loan in arrears, can trigger default fees and interest, and may be reported on your credit file. Repeated or prolonged default can lead to the lender enforcing its security, which means the machine. Early contact usually leads to better outcomes than silence.
Will my lender defer a seasonal repayment?
Some will, particularly where the farm has a solid history and the shortfall is clearly due to seasonal conditions. Options can include deferring the payment, spreading it across later instalments, or extending the term. Nothing is guaranteed, so prepare as if you need to make a case.
Is the Rural Financial Counselling Service really free?
Yes. The Department of Agriculture, Fisheries and Forestry describes it as free and confidential support from qualified rural financial counsellors for eligible farmers, fishers, foresters and small related businesses in, or at risk of, financial hardship. The national line is 1300 771 741.
Can I use my Farm Management Deposit to make the repayment?
You can withdraw it, but the amount is assessable income in the year you withdraw it, and withdrawing within 12 months of depositing generally isn't deductible unless an exception applies, such as severe rainfall deficiency. Ask your accountant before you withdraw.
Could I sell the machine instead?
Sometimes that's the right call, especially if the farm can manage with a smaller or older machine or by using contractors. You'd need to pay the loan out from the sale, and the price needs to cover the payout. Our guide to selling a financed machine covers how that works.
Can a new loan pay the overdue repayment?
It can, if it improves your position rather than just delaying the problem. A property-secured business loan, for example, could cover the shortfall while you wait for the next season. It needs a clear repayment plan.