What Are Different Farm Loan Programs And How To Choose The Right One?

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It is quite easy for many of us to forget that agriculture is still the primary source of our food and many other products we routinely use in our lives.

Let’s be honest, being a farmer does not come cheap, and it is even more challenging to make a living at it when you are just starting. Amateur farmers have their work cut out for them. But luckily, help is at hand.

If you are interested in starting a career as a farmer, the information and resources on farm loan programs in this post might assist you in getting started.

 

What Are Farm Loan Programs?

Farm loan programs assist farmers in purchasing, running, and expanding their farms. These loans can aid existing farms with a financial crisis during a seasonal issue and provide liquid cash at the starting phase of a new farm’s operation. Financing of agricultural equipment, livestock, and crops, in addition to credit lines, are all frequent forms that a farm loan program might take.

 

Financial Challenges In Farming

Imagine you’ve never farmed before, but you’re interested in purchasing a farm because you want to get your feet wet in the industry. You’ll need virtually everything to begin going.

You may be able to mitigate farming expenses with the following farm loan programs:

Purchase Of Land

The purchase of the actual farm property and any associated buildings is the most expensive aspect of the deal. The price can vary substantially depending on which state you are in and the area around your property.

Smaller farms in more rural locations with little to no development are far less costly than larger farms close to suburban areas and with significant buildings on the property.

In general, the less established something is, the more affordable it will be. But, this also implies that you’ll have to put in more effort to turn it into a profitable business.

Farm Equipment

Then there is the equipment that goes along with it. The machinery required might differ from one business to the next because of the wide variety of products and commodities cultivated and sold.

At the very least, you need a truck, a tractor, tractor equipment, an all-terrain vehicle (ATV) or side-by-side vehicle, a trailer, numerous power tools, and possibly a dozen more things to run practically any type of farm. That might add up very quickly if you are beginning entirely from scratch.

Additional Purchases

You should also have money to buy seeds for planting, cattle to grow, new fencing, fertilizer, and herbicide. To be successful with cattle, you also need a reliable supply of feed, farm staff, and the occasional assistance of a veterinarian.

When it comes to crops, you could be required to purchase specialized items to help treat a disease problem or a deficit in the soil. You will most certainly need to purchase fuel or diesel to keep things functioning.

Transport

Whether you harvest organic veggies or row crops, slaughter cattle, or make unique products, you are still responsible for the costs associated with transporting the goods to the market.

 

Choose The Right Types Of Farm Loan Programs

We know for sure that if you are planning to start farming without a significant amount of investment in your bank, you certainly would need to approach bank loans. However, before availing of that facility, you must be aware of all the available options. Here are a few farming options that you can opt for.

Government Farm Loan Programs

Depending on your credit score, you may have trouble getting a loan to finance a farm mortgage. Most people don’t know this, but help is available if you’re willing to look for it. Consider alternative government programs to assist landowners, such as the Farmable Wetlands Program (FWP).

The USDA Farm Loan Programs are for farmers and ranchers who desire to start or expand their farming operations. The USDA’s Farm Service Agency (FSA) provides interim loans to people who cannot receive commercial loans.

The following is a list of the loan programs offered by the FSA:

Farm Ownership Loans

The purpose of these farm mortgage loans is to assist individuals in purchasing or expanding a farm property, constructing new buildings, or paying closing costs. It is the initial barrier to entry when beginning a farming operation.

Operating Loans

These loans are for general purposes and can cover almost anything related to your farm, including feed, livestock, fuel, farm equipment, farm chemicals, family living expenses, insurance and repairs, improvements to fencing and buildings, etc. For instance, there are USDA-guaranteed farm loans that can assist you in making improvements to your current farm by allowing you to finance the purchase of new machinery. This could be something that you are interested in doing.

Targeted Audience Loans

These loans for agricultural purposes assist particular groups of people (e.g., racial minorities, women, youth, new farmers, etc.). Because they are so specialized, there is a chance that they can work out exceptionally well for you in the context of your scenario, but there is also a chance that they won’t.

Microloans

Microloans may be suitable for small farms or new farmers. They have more minor criteria and paperwork but provide less financing than other lending options.

Specialty And Emergency Loans

These loans aim to assist current farmers in recovering from productivity and physical losses brought on by natural catastrophes such as drought, flooding, or other calamities.

Other Non-Governmental Farm Loan Programs

There are several alternative agricultural equipment financing options available in addition to the USDA programs:

Alternative Lenders

Many alternative lenders provide equipment financing options if you need money urgently and don’t want to bother you with a prolonged application process.

Captive Finance Companies

A farm equipment manufacturer or dealer may arrange for one of these finance companies as an offshoot or subsidiary. Like at a car dealership, they’ll help you finance your purchase of their stuff. In addition, they’ll provide a range of leasing and purchasing possibilities.

Agricultural Loans

If you are looking for farm loan program options, you can connect with United Farm Mortgage. They have provided financial assistance to American farmers and rural communities for over 35 years.

United Farm Mortgage serves farmers from all over the United States. To start a loan application, contact us today!