Consumers fully understand, farmers are dedicated to the land and stay close to the soil. As a farmer you understand that in order to pursue your love of planting and harvesting crops, it’s necessary your operation to secure farm land loans that will sustain you and allow you to maximize your ROI (return on investment) off of your farming business.
What’s startling is, numerous farmers within the agriculture sector have not been given the details regarding the acquisition of financing for their business. In fact, far too often this lack of financial knowledge regarding financing leaves a farmer feeling discouraged due to the seemingly never-ending list of operational expenses. However, the good news is, securing the funding your business needs is not as difficult, or as complicated as you may think.
Why Agricultural Loans are Important
Farm land and other types of agricultural loans help farmers not only manage, but expand their operations as well. Subsequently, when selecting a loan for your farming operation, look for, and focus on securing financing that includes low-interest rates. Doing this will help you lower your ongoing operational expenses on your farm.
Aside from buying land, you can also use a farm loan to:
- Cover Operating Expenses: If you need additional working capital to cover operating costs, taking out an SMB farm loan can help you do just that.
- Purchase Equipment: Wagons, tractors, farm trucks, backhoes, seed drills, and other farm equipment are expensive, but as you know, necessary when running a farm. SMB farm loans can also cover the costs of purchasing the equipment needed for your business.
- Marketing and Advertising: The funds you receive from a farm loan can also help you market and advertise your goods. Many times, in order to maximize your revenue, you will need to promote the produce you cultivate and grow. You may want to consider hiring someone to create a marketing plan for your agriculture business.
Here are the Best Types of Farm Land Loan Programs Available for an Agriculture Business
Whether you goal is to purchase land or bridge cash flow gaps, the following are loans designed to bolster your agriculture business:
1. Equipment Financing
If you need to purchase farm equipment but can’t afford to pay the full amount upfront, equipment financing provides you with the funds you need to upgrade or purchase new equipment. You don’t have to provide collateral since the equipment purchased secures the loan. You also don’t need to show excellent credit, however if you default on the loan, lenders may repossess the equipment. On the other hand, you will eventually own the equipment once you’ve repaid the loan in full.
2. SBA 7(a) Loans
The Small Business Administration has created multiple loan programs for small businesses. Among the types of SBA loans, the 7(a) loan has become popular. Business owners prefer the 7(a) loan because of its low-interest rates, high loan limits, and flexible terms. You can use the funds you receive from the 7(a) loan to expand your business, purchase land, buy real estate, or fund other business expenses.
3. Business Credit Cards
One of the first types of financing that agriculture business owners can get is business credit cards. It’s also a smart one, too. With credit cards, you can pretty much use the resource to purchase supplies, fund business expense, or cover unexpected costs. With one, you won’t have to wait for a few days or weeks for the money to be approved. You can use your card and pay for whatever it is your business currently needs.
After each use of the credit card, the expenses will be reflected in your bill. You will be charged with a monthly interest rate on top of the amount you have to pay. However, many business owners may sometimes stumble upon 0% interest deals, so you will only have to pay for the original price of the item.
Moreover, credit cards also gives business owners a chance to earn points. Depending on their preference, they can either convert it to airline miles or use it to claim discounts. Nevertheless, it helps businesses save a few bucks.
4. Business Line of Credit
A business line of credit is a revolving credit where business owners can access funds from a predetermined credit limit. With this type of loan, you only have to pay for the money you’ve withdrawn along with the interest. Once you’ve repaid the loan, you can access the funds again.
If your goal is to purchase farmland, bridge a cash flow gap or expand an existing agriculture business, farm land loans is for you. You can find a lot of companies that can address your financing needs.