Benefits of Agricultural Financing
Purchasing, expanding, or owning farm or ranch land can be a great investment, and a great step in growing your business. If you are looking for assistance financing your farm or ranch there is a lot to consider. When borrowing money it is important to do your research and learn about all of your options. The good news is depending on the property that you plan to own and your qualifications getting an affordable agriculture loan is becoming more and more available.
Agricultural Loans are generally an inexpensive financing option.
These loans usually come with a fixed interest rate on a shorter loan term of 20-40 years. These are all variables depending on the type of loan you decided to go with, but in general the rates are kept low because agricultural loans are considered to be assistance.
Agricultural Loans are tailored to fit specific situations
Depending on what you need to fund on your farm there may be a loan made to fit. There are loans to help expenses of ownership, loans that aid operating expenses, and even emergency loans that can help rebuild after damage caused by a natural disaster.
An Agricultural loan can fund rebuilding or expansion of your property
In the devastating event of a natural disaster farms or ranches can sometimes be left with a lot of damage. There are agr. loans that can help repair and replace damaged property and equipment.
Types of Agriculture Loans:
There are many different type of loans designed to fit your expense needs. In the process of searching for and applying for loans finding a loan that fits your situation is really important. The type of loan you apply for can determine your interest rates and loan terms.
Operating Loans – Covers livestock, crops, or equipment costs.
Down payments loans – Helps farmers and ranchers purchase the property to start their business.
Land Contract – Aids the purchase of agricultural land
How to qualify for an Agricultural Loan
Have a Business Plan; the first, and most important reason to have a business plan for your ranch or farm is it is required for receiving a loan. A solid business plan is a crucial component in the application process for an agriculture loan. Clearly laying out your goals, assets, incomes, and the production of your property have a lot of determining power. It can determine weather you receive a loan or not because it gives the lender an idea about your abilities to pay the loan back. Make sure you include these concepts in your business plan:
Highlight goals – What are you profit and expansion goals? What is your 5 year, 10 year plan?
Mission -What is the purpose of your agricultural business and how do you plan to carry it out?
Assets – What sets you apart, what do you have that will make you succeed ?
Income – What other income do you have that makes you finically stable, how do you plan to pay back your loan?
Production – What are you producing? How do you plan to produce it?
Frequently Asked Questions About
Q: What is the difference between an agricultural loan and a traditional mortgage loans?
A: In most situations agricultural loans are used a lot like a traditional mortgage loan, to purchase a farm or ranch. However, these loans are becoming more popular for other types of rural properties and farm operating expenses.
Q: How long do agriculture loan terms last?
A: Agriculture loan terms are usually a bit shorter than the typical home loan. An average term period is usually 20-30 years for an agricultural loan.
Q: Do I have to be a first time homebuyer to be eligible for an agricultural loan?
A: No, there are no limits on previous homeowners, and agricultural loan can also be used to refinance a current properties mortgage.
Q: Can I get a loan to help pay for damage caused my natural event.
A: Yes, Emergency agriculture loans have assisted many farmers and ranch owners after a natural disaster to rebuild damaged property or equipment.