Worked example

Feed mill financing case study — a 10 t/h project, start to schedule

This page walks one feed mill project through the financing questions in order. It is an anonymised, composite worked example built from the pattern we see repeatedly in buyer enquiries — the structure is realistic, the numbers are illustrative, and nothing here is a quotation, a lender indication or a client's published accounts.

What does a financed feed mill project look like in numbers?

In this worked example a 10 t/h poultry feed mill is funded with a 30% cash share and a term loan with a one-year grace period inside a seven-year tenor. The first plan failed on debt service cover in the ramp-up year; raising the cash share and extending the grace to match the real commissioning timetable brought every year above cover. The figures below are an anonymised composite used for planning, not a client's actual accounts or a lender's offer.

The project

Scope: greenfield 10 t/h poultry feed mill — intake, grinding, batching, mixing, pelleting, cooling, bagging and bulk outload.
Output plan: roughly 48,000 tonnes per year at the utilisation the sponsor considered realistic after the first year.
Buyer position: an integrator covering its own broiler operation, with limited third-party sales in year one.
Site: land owned, building to be constructed, grid connection requiring an upgrade.
Reason for financing: the sponsor could fund civils and part of the equipment in cash, but not the full installed scope plus start-up stock.

Every figure on this page is illustrative and stated in one currency unit; nothing is converted and nothing is quoted.

First plan — and why it did not hold

The sponsor's opening plan assumed a 20% cash share, a seven-year loan, six months of grace and full output from the first year.

Commissioning realistically ran past the six-month grace, so the first principal instalment landed before the mill was stable.
Year-one output was planned at 100% of nominal — the flock build-up alone made that impossible.
Working capital for ingredient stock was left out of the funding need and would have been paid from operating cash.
Result on paper: debt service cover fell below 1.0 in the first repayment year, with no headroom for a raw-material price move.

None of this was an arithmetic error. All four were assumptions.

What changed

Item	First plan	Revised plan
Cash / equity share	20% of funding need	30% of funding need
Working capital	Excluded from funding need	Included as start-up stock
Grace period	6 months	12 months, matched to commissioning
Year-one ramp-up	100% of full output	60% of full output
Tenor	7 years including grace	7 years including grace (unchanged)
Repayment method	Annuity	Annuity (unchanged)

Keeping the tenor fixed meant the longer grace shortened the repayment window and raised each instalment — accepted deliberately, because cover in the ramp-up year was the binding constraint.

How the revised schedule behaved

Running the revised inputs through the financing calculator produced a schedule the sponsor could defend in a lending conversation.

Cash needed at signature rose, because it is the cash share plus arrangement and insurance fees — that increase was the price of the plan holding together.
Year one was interest-only, with output at 60% of nominal and no principal due.
Debt service cover cleared 1.0 in every repayment year, with the tightest point in the first full repayment year rather than in year one.
Total interest was higher than in the first plan, which is the normal trade for deferring principal.
Cash after debt service stayed positive throughout, leaving room for maintenance capex.

Run your own figures rather than reusing these — capacity, ramp-up, margin per tonne and rate all move the answer.

What this example is useful for

Seeing which levers actually move debt service cover: cash share, grace length and ramp-up assumption, in that order.
Understanding why working capital belongs in the funding need rather than in the operating plan.
Preparing the figures a lender asks for before the first meeting instead of during it.
Building an RFQ where the financing structure and the technical scope agree with each other.

Next step

Run your own figures Financing FAQ Submit feed project request Feed mill project financing

Questions about this example

Is this a real client project?

It is an anonymised composite built from the pattern of enquiries we handle, not one client's accounts. The structure, the sequence of problems and the levers used are real and repeat constantly; the specific figures are illustrative and should not be reused as a benchmark.

Why was the grace period extended instead of the tenor?

In this example the binding constraint was cover during ramp-up, not the size of the instalment. Extending grace inside a fixed tenor protected the weak year at the cost of larger later instalments, which the plan could carry. Where the instalment itself is the problem, a longer tenor is the usual lever instead.

Why did raising the cash share help so much?

A larger cash share reduces the loan, which reduces both interest and principal in every year of the schedule. It is the fastest way to lift debt service cover, and it is also the signal a lender reads most directly about sponsor commitment.

Can FeedMatch introduce a lender for a project like this?

No. FeedMatch is not a lender, broker or agent of record and makes no financing introductions or approvals. We help define the project, prepare the scope and produce the technical and commercial figures a financing conversation requires.

Illustrative worked example for planning purposes. Figures are composite and anonymised; they are not a quotation, a lender indication or a client's published accounts. No rate, term, approval or return is offered or implied. FeedMatch Group is not a lender. Every feed project request is reviewed manually by David / FeedMatch Group, and supplier introductions are made only after internal approval.