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Agricultural Loans

ByShannon Tani,
business.com writer
|
Jul 15, 2011
Home
> Finance
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Start or expand a farm with agricultural land financing

Agricultural loans help farmers run their farms more efficiently. It can be difficult to keep up with all of the costs associated with running a farm, so farmers need low interest agricultural loans to help them stay afloat.

Fortunately, the government often steps in with low interest loans and other subsidies that help farmers turn a profit.

Uses

Farmers can use agricultural loans to:

1. Purchase farm land. Whether you are just starting out as a farmer or wish to expand your current farm business, agricultural land loans help you purchase the land you need to build a great farm.

2. Cover operating expenses. Besides needing farm land financing, many farmers also need help covering some of the operating costs. Farm equipment is expensive, but it's necessary to run the farm. With better equipment, you can cover more land quickly.

3. Help with the marketing of their product. If they want to make a profit, then farmers need to sell the product they create. This means that they need an effective marketing plan and money to pay for marketing costs in addition to farm land loans.

Next Steps 

Apply for an agricultural land loan from a major bank

When farmers need financing, most turn to their local banks first. It's often easier to get a loan from the bank that you typically do business with. If your credit is good, you should be able to get an affordable interest rate on your loan.

Apply for direct and guaranteed loans for farm land from the government

If you do not qualify for a traditional loan, you don't have to sell the family farm. There are government agencies that aim to help farmers get the cash they need to be a profitable business.
Farm Service Agency offers loans to farmers to help cover costs. For example, direct ownership loans help farmers to purchase the land and livestock that they need to get started, while a direct operating loan will help to cover equipment and other farm operating costs.  The National Council of State Agricultural Finance Programs lists the agricultural loan programs for each state.

Look for agricultural home loans to purchase a home and farm land

If you want to purchase land in order to run a farm, then there are a number of loans that apply directly to you.
Housing and Community Facility Programs, operated by the government offers loans to families that wish to live in rural areas. Farm Credit Services also provides loans for homes in rural and agricultural areas.

  • Make sure that you understand the details of your agriculture land loan before you sign. You want to make sure there are know hidden costs involved.

 

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Shannon Tani
Shannon Tani
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