Enterprise Business Experts

Top Menu

  • Reach Us

Main Menu

  • Home
  • Business
  • Business Experts
  • Enterprise
  • Industry
  • Investment
  • Management
  • Marketing
  • Reach Us

logo

Enterprise Business Experts

  • Home
  • Business
  • Business Experts
  • Enterprise
  • Industry
  • Investment
  • Management
  • Marketing
  • Different Parts Of Your Business You Can Outsource To Reputable Companies In Thailand

  • Setting Up Your New Office Space In Bangkok

  • Three Unique Benefits of Automating your Repair Shop with a Management Software

  • How to Save Intelligently—Investment Plans

  • How to Invest in Metals: The Top 5 Ways

Finance
Home›Finance›A Guide to Agriculture Loans and How You Can Use Them

A Guide to Agriculture Loans and How You Can Use Them

By Danny Messinger
March 6, 2018
1282
0
Share:

The world would be nowhere without farming. It has been a way to sustain families, villages, and the entire world for thousands of years, and it shows no sign of stopping. In fact, in a press release on January 19, 2018, the United States Department of Agriculture announced that 2017 was a near-record year for farm loans with nearly $6 billion in new credit accessed. Of more than 120,000 loans, more than 25,000 went to new or underserved farmers. Whether you are just starting your journey into agriculture or you are a seasoned professional, it is important to understand how agricultural loans work and what they can do for farmers and ranchers.

Basic Loan Information

Like most types of loans, agriculture loans are available as three main types: short-term loans, immediate-term loans, and long-term loans. Short-term loans are best for people who do not need large amounts of money to complete projects but would still like to upgrade or otherwise improve their farm. Short-term loans are often available as revolving or non-revolving lines of credit. A revolving line of credit means that the person can use the money again as soon as he or she pays it back. A non-revolving line of credit is a single disbursement is not reusable upon payment.

Immediate-term loans are best used for assets that depreciate over time. Common agricultural examples include equipment, livestock, or machinery. They might also be useful for restructuring balance sheets to create more working capital. These loans typically have repayment times between one and 10 years. Long-term loans are sometimes referred to as contract financing and typically include real estate mortgages and other loans with repayment terms of 10 years or longer. These loans are best for purchasing, building or renovating housing, barns, and other important farming structures.

Common Types of Agriculture Loans

According to the USDA’s Farm Service Agency, there are four common types of farm loans: direct operating loans, microloans, direct farm ownership loans, and guaranteed loans. Direct operating loans allow the borrower to purchase livestock and farm equipment, purchase insurance, pay for family living expenses, and more. People who grow specialty crops or other or who own other types of non-traditional farms can use microloans. These loans, which require less paperwork and are easier to qualify for, are also good for small farms or new farmers.

Direct farm ownership loans are best for people who want to purchase large amounts of new land or to enlarge their current farms. They are also beneficial for constructing new buildings or protecting and conserving soil and water. Finally, guaranteed loans are best for family-owned and -operated farms that do not qualify for commercial farm loans. These loans make it possible to finance smaller operations but may also come with more service fees.

Other Types of Agriculture Loans

Many lenders simplify their loans even further by referring to them as operating, equipment, livestock, or agriculture real estate loans. Operating loans are for people who need money to produce and harvest crops, purchase feed for livestock, pay taxes, or take care of other agricultural expenses. Borrowers receive budgeted loan disbursements in a revolving line of credit. Equipment loans allow borrowers to purchase new machinery and other farm equipment and typically carry terms of three to seven years.

Borrowers who wish to purchase new livestock can do so with livestock loans, which often have repayment terms of up to seven years. Agriculture real estate loans are one f the most popular and may allow financing for up to 30 years. In addition to purchasing new real estate, borrowers can construct new facilities or make improvements to irrigation projects. These loans are also useful for refinancing and consolidation of debt.

Some farmers may find themselves in dire straits in situations such as drought, flooding, or other natural disasters. In these situations, farm owners may want to look into emergency loans. These loans can help with loss recovery that goes above and beyond what an insurance policy might pay out.

Targeted Agriculture Loans

Because farming is so important for survival, many lenders provide specialized loans that offer benefits for young people, minorities, women, and those who are just starting out in the industry. Youth loans are for young adults participating in Future Farmers of America, 4-H, or in similar organizations. The money is useful for purchasing livestock or financing educational pursuits. Minorities, women, and beginner farmers and ranchers typically follow the same guidelines as other, more experienced farmers. For the purpose of lending, a beginner farmer is considered someone who has owned his or her farm for less than 10 years.

Who the Loans Benefit

Agriculture loans benefit a wide variety of people and farm types. In addition to traditional farms, minority- or women-owned farms, and youth loans, the loans may be useful for urban farmers who grow crops on rooftops in places where traditional farming methods aren’t possible. The loans are also beneficial for family farms that want to strengthen their land, livestock, and crops against big agriculture in the area. Finally, agriculture loans also help people who own alternative farming operations, such as vertical farmers, hydroponics, or freight container farmers.

Tips for Choosing and Being Approved for a Loan

When it comes to choosing a lender and being approved for a loan, farmers must be diligent. When choosing a lender, it is important not only to talk with the financial institution but to verify license information, ensure the company has a good reputation in the lending community, and speak to current and former borrowers to see if they would recommend the company themselves.

After choosing a reputable company such as Western AgCredit, chances of approval can increase if the prospective borrower has a strong financial plan and provides the correct documents, such as deeds, tax forms, or other financial documents, upfront. Regardless of the lender or type of loan a borrower chooses, he or she must be sure to read the terms and conditions before signing on the dotted line. Verify interest rates, service fees, and other repayment information and ask questions if necessary.

When properly cared for and funded, a farm can sustain life for people and animals for miles around. It is certainly a worthy financial investment, especially with a strong lender in your corner. Just ask any of the thousands of people who borrowed to sustain their own farms last year.

Previous Article

The Right Way Of Tossing the Discus

Next Article

Linux Training and Red Hat Certification

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Related articles More from author

  • Finance

    What Are The Secrets To Get Financial Transformation In A Business

    June 15, 2018
    By Danny Messinger
  • Finance

    4 Reasons to Hire a Chartered Accountant

    July 12, 2021
    By Danny Messinger
  • Finance

    Private Hard Money Lenders – The Various Lenders And How They May Help Property Investors!

    November 22, 2018
    By Danny Messinger
  • Finance

    How to deal with fear in the options market

    April 22, 2021
    By Danny Messinger
  • Finance

    How to Invest in Metals: The Top 5 Ways

    March 18, 2022
    By Danny Messinger
  • Finance

    Have Poor Credit? Personal Loans Might Help Your Scores

    September 30, 2019
    By Danny Messinger

  • Business

    The Critical Steps in Finding a Missing Person

  • Business

    5 Mistakes to Avoid When Entering the Sportsbook Business

  • Business

    A Quick Insight Into Digital KYC: Discover The Emerging Tech Demand!

  • Recent

  • Popular

  • Comments

  • Different Parts Of Your Business You Can Outsource To Reputable Companies In Thailand

    By Danny Messinger
    July 18, 2022
  • Setting Up Your New Office Space In Bangkok

    By Danny Messinger
    June 17, 2022
  • Three Unique Benefits of Automating your Repair Shop with a Management Software

    By Danny Messinger
    June 9, 2022
  • How to Save Intelligently—Investment Plans

    By Danny Messinger
    May 14, 2022
  • How to Invest in Metals: The Top 5 Ways

    By Danny Messinger
    March 18, 2022
  • Different Parts Of Your Business You Can Outsource To Reputable Companies In Thailand

    By Danny Messinger
    July 18, 2022
  • Benefits Of Hiring Event Companies

    By Danny Messinger
    January 12, 2016
  • Neglect The Options

    By Danny Messinger
    January 14, 2016
  • Deciding time for you to Sell a company

    By Danny Messinger
    June 3, 2016
  • Precautions to Take When Working on Electrical Wiring

    By Danny Messinger
    June 10, 2016

Recent Posts

  • Different Parts Of Your Business You Can Outsource To Reputable Companies In Thailand July 18, 2022
  • Setting Up Your New Office Space In Bangkok June 17, 2022
  • Three Unique Benefits of Automating your Repair Shop with a Management Software June 9, 2022
  • How to Save Intelligently—Investment Plans May 14, 2022
  • How to Invest in Metals: The Top 5 Ways March 18, 2022
  • Pipe Repair Solutions: How to Fix a Pipe Leak in Simple Steps February 28, 2022
  • The Best Stretch Wrap Machines for Businesses of All Sizes February 20, 2022
  • Tips for Getting Cash-Out Refinancing (Refinansiere) February 10, 2022

Archives

  • July 2022
  • June 2022
  • May 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • July 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • January 2016

Tags

Business Control your income Enterprise Entrepreneurship Industrial industrial painting Perth Investment loan with no job Marketing office fit outs printing companies Pontefract Sheet Metal Companies Small Business soap production virtual offices sydney
  • Home
  • Business
  • Business Experts
  • Enterprise
  • Industry
  • Investment
  • Management
  • Marketing
© 2022 Enterprise Business Experts. All Rights Reserved.