Can you borrow against livestock you own? How a lender counts a herd

Yes, you can usually borrow against livestock you own. A lender can register a security interest over your cattle or sheep on the PPSR and lend against them, counting the herd at a discounted saleyard value rather than what it’s worth to you. But a herd is moving security. Animals are sold, born, culled and lost, so lenders often want land or another asset behind the loan as well.

That’s the honest shape of it. A paid-off breeding herd is one of the biggest things a farm owns outside the land, and it can open doors. This guide follows the herd from the paddock to the lender’s desk: how it’s counted, what the registration actually covers, and what happens when the stock leaves.

What does borrowing against a herd actually mean?

The herd is the starting point. You already own the animals. The question is what stands behind new funding while you keep running them.

The usual question for any asset-backed loan is: what stands behind this money? With livestock, the answer is a security interest the lender registers on the PPSR. There are three common ways it shows up.

Route	What the lender holds	Where it fits
Specific security over a described mob	A registered interest over named stock	Smaller, shorter facilities
General security over the business	A sweep over stock, plant, receivables and more	Cash-flow and line-of-credit facilities
Land-secured loan with stock as support	A mortgage first, the herd as extra cover	Larger, longer facilities

The third is the steadiest. Land doesn’t wander off, drop in value after a muster or get sick. If you own the country, our guide to property-secured business loans covers that route, and the farms and seasonal producers page shows where each route tends to fit across the year.

How does a lender value a cattle or sheep herd?

A lender builds the number from the bottom up, in four steps.

1. Head count by class. Breeders, weaners, steers, heifers and bulls are different assets with different prices.
2. A market price per class. Lenders refer to saleyard reporting. Meat & Livestock Australia’s National Livestock Reporting Service publishes indicators such as the Eastern Young Cattle Indicator, a rolling average of young cattle sales in New South Wales, Queensland and Victoria. It’s a benchmark, not a quote for your mob.
3. A quality adjustment. Condition, age, breed, and how well the stock suits the buyers in your region.
4. A discount for a forced sale. The lender asks what it would fetch if sold quickly in a bad market, then lends a portion of that.

Prices swing with seasons, rainfall and export demand, which is why lenders keep a cushion. Don’t be surprised if a mob you’d happily value at one figure supports a loan well below it.

An illustrative example: a grazier owns 300 breeders and their calves, no finance outstanding. The lender counts breeders and young stock at separate class values, lowers each for resale risk, and then excludes the 40 older cows it expects to be culled this season. What’s left supports a facility, but it’s well short of the total you’d write on a stock sheet.

What does the PPSR registration cover?

The PPSR’s collateral guidance sets out livestock as a sub-class of the agriculture class. It takes in living animals such as cattle, sheep and goats, their unborn young, and the products of the livestock before they become proceeds. A registration covers a single collateral class, and there’s a free-text field to describe what’s included.

Three consequences follow.

• Calves and lambs can be inside the security. That’s the point of including unborn young, but the wording of the security agreement should match what you and the lender intend.
• Proceeds matter. When you sell stock, the cash is proceeds. Most facilities say where it must go. Read that clause the way you’d read a repayment schedule.
• Priority is first in time, with exceptions. A supplier or stock financier who funded the animals can have special priority. The PPSR’s cattle feed case study shows a feed supplier registering over the cattle it supplied. Our PPSR guide covers how ranking works.

Before anyone lends, search your own name or ABN on the PPSR. An old registration from paid-off stock finance can still be sitting there and will slow a new lender down.

What do lenders ask to see?

A herd is hard to see from a desk, so lenders lean on records.

• A recent stock count by class, ideally dated within weeks
• NLIS records. Under the national system, animals leaving a property must carry an accredited device, and movements are recorded against your property identification code (PIC)
• Brand registration and sale statements from agents or saleyards
• Insurance details, where stock is insured
• Evidence of ownership, including invoices for purchases and any finance already registered
• Your recent BAS and bank statements, so the lender can see how stock sales flow through the account

Tidy records often matter as much as the animals. Our guide to building a funding pack lists the rest.

If you’d like to see which of your assets can carry a loan before you gather it all, you can check your options here. It takes about a minute and doesn’t involve a credit check.

What happens when the stock is sold, born or lost?

This is where herd loans differ from a machine loan. An excavator stays put. A mob doesn’t.

• Sales. Selling in the ordinary course is usually allowed, but the proceeds may need to go to the lender or a nominated account, or you may have to buy replacement stock. Ask what’s required before a sale, not after.
• Births and weaning. Progeny can be added to the security, which helps a lender’s cover rise through the season.
• Culling and drought destocking. A forced sell-down can leave the lender holding fewer animals than it lent against. Some facilities set a minimum head count or minimum value. Know that number, and what happens if drought pushes you under it.
• Death and disease. Stock insurance helps where it’s available, and lenders often ask for it. Check what it excludes.

Sorting out these clauses in advance is the cheapest protection you have. Seasonal income shapes the rest of the picture, and our page on seasonal and lumpy income explains how funders look at it.

What should you check before you offer the herd?

Run through this short list first.

1. Search the PPSR for registrations against your name, ABN and any former trading entity.
2. Count the mob by class on the day, and note which animals are breeding stock you’d never sell.
3. Ask your bank whether its existing general security already sweeps in the livestock. If it does, a second lender may not be able to take it first.
4. Work out how much of the herd you’d realistically sell in a hard season, so the minimum head count isn’t a trap.
5. Compare the total dollar cost of each offer, not just the headline amount. Our total cost guide shows how.

An hour on this list can save a restructure later.

When is livestock the wrong thing to lean on?

Livestock alone is weak security. It’s a poor fit when:

• the herd is small relative to the amount you need;
• a stock financier or supplier already ranks ahead on the PPSR;
• you need a long term, because the animals turn over and age;
• the business is in a dry run, when the stock value is lowest and the cull pressure highest.

In those cases, look at what else you hold. Land, water entitlements, equipment and receivables can carry the loan, with the herd as support. Our guide to borrowing against water entitlements is one example of a farm asset that isn’t the stock itself, and combining funding routes without clashing explains how to layer security without tripping over your bank’s.

Let’s see what your herd can stand behind

Running livestock means carrying a lot of value that’s hard to reach until the next sale. If your herd is paid off and you’re wondering what it, together with the rest of the farm, could support, that’s a conversation worth having before you need the cash.

Enquiring takes about 60 seconds and there’s no credit check when you first ask, so your credit file isn’t touched just for finding out. We don’t send your details to a pile of lenders. A real person reads your situation and calls you to talk through the routes that fit a farm like yours.

One request: fill the form in accurately, including the stock numbers, what you owe and what’s already registered against the animals. It means we can match the right option first time.

See if you qualify →