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Farm Financing: Tips on How to Get an Agricultural Loan


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Need to buy farm equipment, livestock, or finance an operation? Do you own and operate a farm and need financing? As a farmer, you know that your business requires a lot of supplies to be productive. However, you may not have the necessary funding to acquire the equipment you need for your operation. And obtaining a farm loan might be your first option.


An agriculture loan can help you get started or expand your farm business. However, the process of applying for an agriculture loan can sometimes be tricky because your operation is unique. There are several factors that influence whether you are eligible for an agriculture loan. To help you out, here are some tips on how to get fast approval for an agriculture loan.


Decide on the Type of Agriculture Loan You Need

There are several types of farm operating loans available in the business industry today, depending on your needs and what you want to achieve for your farm business. The best way to get approved for an agriculture loan is to choose a type that matches your budget and farming operations' requirements. 


Your agricultural lender may offer short-term or long-term loans, equipment financing, or operating capital, among other types of agriculture loans. Take time to explore all options before choosing which one suits your farm operation's current needs.


Be Able to Show an Income Potential

The major factor lenders consider in deciding if you are eligible for an agriculture loan is the amount of money that your farm operation can generate. You may not be required to show proof that you have already generated a profit. Still, it is recommended that you show evidence that there will be enough earnings when it starts running. This means having realistic projections on how much your farm business can produce in the next couple of years.


If your farming business has been profitable before, make sure to bring documentation showing this information when applying for an agriculture loan. Prove to the lender that you know what needs to be done. You have to win their confidence in your abilities as a farmer by giving specific details of your plan on how farming will become lucrative.


Get Your Business Plan Approved

Create a business plan that is appropriate for agricultural financing. Make sure that your business plan has all the required components to get fast approval on your application. Your agricultural lender will need complete details on what you are going through to approve your farm operations' needs guidebook before applying for an agriculture loan.


Be Able to Secure Collateral for the Loan

Your farming operation may not have any assets yet, but there is still a chance that you can get an agriculture loan if it has a good credit score with local banks and financial institutions. For instance, if you already have the equipment needed for farming, lenders may consider the value of these assets as collateral for your loan.


Get Ready to Provide Additional Documentation

Your agricultural lender will also need complete documentation of your financial records and the property that will be mortgaged so there are no mistakes on your loan application. Make sure to provide all necessary documents to avoid rejection for an agriculture loan.


Get Organized

Before you start attempting to acquire any agricultural loans, ensure that your finances are organized properly. This means getting rid of unnecessary liabilities and increasing business revenue, if at all possible. Also, try to calculate the total time you will need before repaying the debt and compare this with the loan repayment period's duration.


If there is a slight surplus between what you owe and how long it'll take to pay off, consider negotiating with lenders about extending your payment schedule. On top of that, be sure you're able to repay your debts on time. Also, keep outstanding accounts in good standing throughout the loan's term. Otherwise, it might negatively impact your credit score.


Get a co-Signer If Needed

In some cases, it may be hard for other business owners or those with little experience in farm operations to get approved for agriculture loans despite having good credit scores, secure collateral, and a viable business plan. However, you can ask someone who has a higher credit score to co-sign your loan application to increase your chances of getting a farm loan from lenders.


Be Aware of Interest Rates Offered by Lenders

Current interest rates for agricultural loans vary depending on the type of loan you need, creditworthiness, and collateral. Make sure to inquire about terms and conditions so you can evaluate your options before obtaining quick approval on your loan application.


In addition, comparing different lenders and settling for the one that offers lower fees or even no upfront fees is an excellent technique when applying for an agriculture loan. Beforehand, ensure that you're dealing with a trusted lender.



Getting a loan for your business is a major commitment on the part of both parties. Regardless of the amount, it should not be taken lightly and needs expert advice. A good accountant and lawyer should always be at your service when applying for finance to ensure all your paperwork is in order. If any legal issues are mentioned during the process, they can be dealt with swiftly.