Running a farm can be quite expensive, whether it’s buying new land to farm or buying new equipment. That’s why many people turn to agriculture loans to give them the ability to acquire a new farm or grow current operations.

Agriculture loans are designated for use in the farming industry. However, there are several ways to use the loan proceeds to run your farm or expand your business operations. So if you’re in the agriculture business and planning to get an agricultural loan, here is how to use your loan.

Buy Farming Equipment

You can’t run a farming business without using specialized equipment. High-quality equipment comes with a high price tag, but it will make your job easier. If you’re just starting an agriculture business, you may underestimate the cost of farming equipment. Consider consulting with other farmers in your area to get their insight on what kind of equipment you’ll need and the amount it will cost you to manage the equipment. If you’ve been in the farming business for many years, you should know what you need, but you still need to know the cost of the equipment you want to buy. Whether you need a piece of hay equipment, a tractor, tillage, or specialty equipment like trailers, irrigation rigs, farm trucks, or other vehicles, you can use an agricultural loan to buy this equipment.

Purchase Farming Supplies

Apart from equipment, farming supplies such as seeds, herbicides, fertilizer, and more are essential when starting a farming business. Your agriculture loan can help you start on the right path by allowing you to buy all the needed supplies. But you need to plan your loan amount because you won’t generate any money from the farm until harvest time.

Covers Your Farm Land Costs

You can use agriculture land mortgage loans to purchase or lease land. Buying farmland can be challenging because the type of farming you plan will determine the land you need. Therefore, you’ll need to know what kind of land you need and how much it will cost you to decide the amount you’ll borrow. Remember that some lenders require you to provide collateral before getting an agriculture land mortgage loan to purchase farming land. Lenders know that farming can be tricky, so they want some backing, a loan cosigner, or a guarantor to ensure that their loan is repaid.

Refinancing Older Loan

If you have an outstanding agriculture loan, you may want to refinance the loan. This means taking out a new loan with a lower interest and using the proceeds to repay the old loan with a higher interest. While you will still have an unpaid loan, the lower interest rates will help you save money. However, refinancing makes sense if the interest savings outweigh the costs, so discussing this option with your financial consultants is best to ensure it makes sense.

Advertise Your Farming Business

You will need to market your farm products to the masses once you’re up and running. The cost of marketing your farm business can add up. If you’re unfamiliar with marketing practices, you may need to hire a marketing agency. You can use your agriculture loan funds to sponsor your business marketing campaigns to ensure you get the best results.

Make Repairs & Improvements

Farmland needs regular upkeep and maintenance to operate efficiently. Especially in today’s market, you’ll wish to keep up with the latest trends in land and farm care. You can use your agricultural loan to buy expensive land, infrastructure upgrades, or repairs. These funds can help increase your farm’s value, improve your products and make your business more efficient. This means spending money on improvements and repairs upfront but getting big payouts in the long term.

Invest In Your Farm Growth

You can use your agricultural loan to grow your business. While you will need to spend considerable money on land, equipment, and other supplies when you first start, expanding your farming operation requires similar investments. You can use your agriculture loan to purchase more land, cattle, seeds, and equipment. Remember that you will also need to hire more help because big farms will take more hands.

Weather the Storm

Farming is an unstable business. You can’t know how well your livestock or crops will fare. In addition, some commodity prices are volatile. During the slow farming season, you will need cash to keep the farming business. You can use an agriculture loan to cover your expenses during the slow farming season. Use it to pay your worker’s salaries. While protecting yourself from every eventuality challenging, getting agriculture loans can help you survive a lean season.

Rebuild Your Farm After Disasters

You may encounter drought, tornadoes, earthquakes, flooding, fire, disease or insect infestations, and other threats that can seriously affect your ability to make money in your farming business. You can take out an agriculture loan to cover repairs expenditures, operating costs, get new land, and more when that occurs. The USDA Farm Service Agency (United States Department of Agriculture) has a loan program to help farmers recover after natural disasters.

Cover Operational Costs

The cost of running your farming business and getting it off the ground is high. However, you can use your agriculture loan to cover bills, pay your workers, and take care of your farm expenses until you generate cash flows. So, once you’ve gotten the swing of running the farming business, you’ll be able to recover your own expenses. But in the meantime, an agriculture loan can help you make ends meet.

An agricultural loan is meant to help farmers jump into the farming business or take their existing farm to the next level. So whether it’s expansions, acquisitions, or an upgrade, United Farm Mortgage has the right agricultural loan to meet your needs. We understand your challenges as a farm owner and can help provide funding for all aspects of your operation. Call us today to learn more about the application process.