There is so much opportunity in the United States farming sector. A government census established that the industry was 3.4 million producers strong.
The number of farmers is rising, but there is one major concern. Almost two-thirds of all farmers are over the age of 55. With retirement age around the corner, many of these farmers will move on from the industry soon.
This does create opportunities for up-and-coming farmers. An agricultural loan can get you started in a sector with room to grow.
Read on to learn all about agricultural loans. Explore topics such as agricultural loan rates and requirements.
What Are Agricultural Loans Used For?
Starting up a farm takes a lot of work and upfront capital. Many new farmers choose to take out a loan to pay for their agricultural vision.
Land costs and infrastructure are the big-ticket items in your budget. Then, you will need additional capital for farm equipment, seeds, treatments, and more.
You will also have to bring on employees to help cultivate the crops. It takes time to bring in revenue, and your upfront investment has to cover labor costs until then.
You will need a detailed budget plan before going in for a loan. This way, you know exactly how much to borrow from the bank.
What to Look for in an Agriculture Loan
It is essential to find the right loan for your farming plan. The wrong loan can lead to unfavorable terms or excessive financing fees. There are cues to look for when shopping for the best agriculture loan.
For example, there is no one-size-fits-all approach to agricultural lending. You want to find a lender that offers customized solutions to your banking needs. The best lenders will consider your unique needs and craft a loan to meet them.
You also want a lender with competitive rates and flexible terms. High rates or excessive fees can cut into your bottom line and make your new venture unprofitable.
What Are Agricultural Loan Requirements?
To secure a commercial loan, you need to demonstrate your financial worthiness. The lender’s primary goal during the review process is to validate that the borrower can repay the loan. This comes in the form of financial statements showing revenue or cash on hand.
Offering up collateral to secure the principal amount is another requirement. Common examples of collateral include commercial or residential real estate assets.
The lender will run your credit history before moving forward with a loan. They want to see if you historically make on-time payments and whether you have any accounts in collection. A higher credit score will help you secure a lower interest rate and more favorable terms.
Your Guide to Farm Loans
You are now ready to start shopping for farm loans. You can use the capital to purchase agricultural land and start pursuing your dream.
Private Capital Lenders has been issuing agricultural loans for more than 15 years. They have expertise in farm loans and a reputation for ethics and transparency. If you are in the market for agricultural loans, contact us today to speak with a loan specialist.
