By Jaclyn Hurley


If you practice agriculture and you have farmland and livestock, there is a high probability that you may need an agricultural loan at one time. Several types of agriculture loans are available but you need to know how to obtain them. To get farmer loans from certain agencies, you have to be land owner or use the funds from the loan to buy land. The United States Department of Agriculture or USDA in short develops and executes federal government policy on agriculture, food and forestry. It also offers loans to farmers through its Farm Service Agency.

USDA farm loans can help you improve your existing farmland, finance closing costs, build farm structures, complete conservation projects or purchase new land. If you apply for a farm ownership loan, you will be expected to pay it within a time frame of less than 40 years. If you get a farmland operating loan, you will be expected to pay it within a time frame of less than seven years.

Besides getting a loan from the FSA, you can get a loan guarantee through its agricultural loan program if you are not able to obtain credit elsewhere to buy, sustain or expand your farm. FSA loan officers can help you apply for a loan. You can also seek advice from business advisers when developing a business plan, which is often required when applying for funding.

You should have a detailed business plan which shows your expected cash flow. With this, your lender will know how much you need and determine the amount of money you will be able to repay. Reading through a magazine that advises agricultural producers how to write a business plans can also help you to come up with a good business plan.

Since the situation of every farmer is different, the process you follow to apply for funding may be different from that followed by other farmers or ranchers. Before applying for a loan, you need to first determine the kind of funding you need. You may apply for more than one kind of funding if you need money for different purposes.

Farmers who need to purchase or enlarge their farms or meet the costs of water and soil conservation can apply for farm ownership loans. Those who need to purchase equipment or livestock or meet the costs of minor repairs can get a farm operating loan. Ranchers and farmers who have suffered huge losses as a result of natural disasters that affected their farming operations can get an emergency loan.

Conservation loans are also available and they can help you complete conservation practices in approved conservation plans. After getting a loan from the US Department of Agriculture, you have to pay back the principal plus interest. The total amount of interest you will pay will depend on the loan term and the interest rate. This rate may either be fixed or variable.

The USDA also has a microloan program. With this program, disadvantaged producers, veterans and small scale farmers can borrow 35,000 dollars or less. This is a good financing option if you are starting out. It will provide you with the funding you need to start profitable farming operations and increase your equity. Once you repay a microloan, you can qualify for commercial credit that can help you expand your operations.




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