6 Types of Agriculture Loans to Help Grow Your Farm Business

Agriculture is big business that requires investment in land, equipment, and labor. To help farmers fund their operations, there are several types of agricultural loans that F&M has to offer. Let’s look at six different types of agriculture loans and how they can help your farm business grow. Whether you’re looking to expand your acreage, purchase new equipment, or manage cash flow, understanding the options available to you can help you make the best decision for your business. Keep reading to learn more!  

1) AG Term Loans  

AG Term Loans are long-term loans used to finance investments in farm operations, including livestock, equipment, land, and buildings. These loans are typically secured by the assets they finance, and can be used to purchase, expand, or refinance existing agricultural operations. AG Term Loans offer competitive rates and long repayment periods, allowing farmers to spread out the cost of their investment over several years. When applying for an AG Term Loan, farmers should consider the purpose of the loan and the amount they need to borrow. They should also consider any restrictions associated with the loan, such as limits on the use of the funds or repayment deadlines. F&M’s lenders will assess the risk involved in providing a loan and determine whether we are able to offer the desired terms.  

2) Short Term Operating Notes  

Short term operating notes are loans designed to provide financing for agricultural operations over a short period of time, usually between one and three years. This type of loan is ideal for farmers who need money quickly to cover expenses like seed, fertilizer, livestock feed, or emergency expenses during a busy season. The loan amount will be based on the projected income of the farm, which helps our lenders assess risk.  

3) Operating Lines of Credit  

Operating lines of credit are an important type of agriculture loan that provide farmers with the ability to borrow funds on an as-needed basis, making them an essential part of a farm business’s financial management plan. This type of loan provides access to money for day-to-day operations without having to apply for a loan every time. The amount borrowed can be repaid and borrowed again, based on the available credit limit.  

The flexibility of a line of credit allows the borrower to save on interest payments as they can choose to only borrow as much as they need when they need it.  

4) AGRI-Real Estate Loans  

AGRI-Real Estate loans are a great option for expanding or acquiring land for farming. This type of loan is specifically designed for agricultural businesses and allows borrowers to use the value of the land as collateral to secure the loan. In addition to covering the cost of land purchases, AGRI-Real Estate loans can also be used to fund improvements on existing farmland. This may include building a fence, installing new irrigation systems, and soil erosion control measures.  

5) Farm Equipment Loans  

When it comes to running a farm, having the right equipment is essential. Whether you’re looking to upgrade your current equipment or add to your inventory, a Farm Equipment Loan with F&M can help you finance the purchase of new and used farm machinery, equipment, and supplies.  

A Farm Equipment Loan allows you to set up flexible repayment terms that work with your budget. You can choose a longer repayment period in order to make your payments more affordable or pay off your loan early and save on interest charges. Because a Farm Equipment Loan is secured by the equipment itself, lenders are often willing to offer competitive rates and terms.   

Depending on your situation, you may be able to take advantage of certain tax deductions related to farm equipment purchases. Be sure to talk to your accountant or tax advisor to see if this applies to you.   

6) Specialized Government Assistance Loan Programs  

Government assistance loan programs provide an opportunity for farmers to access financing for their farm operations. These programs typically offer lower interest rates and longer repayment terms than other types of agricultural loans. They can also provide access to financial resources that are not available through traditional lenders.   

Specialized government assistance loan programs can be a great resource for farmers looking to access the capital they need to grow and succeed in their operations.   

Partner With a Lender Who Knows Agriculture  

With the right loan, you can take your business to the next level and increase your output in the long run. Whether you’re weathering a rough season or ready to expand your estate, F&M Bank is here to support you through every stage of the ag business. There’s a reason we’ve been recognized in American Banker’s Top 100 Farm Lender list—our local lenders take the time to understand your unique operations and farmland in order to customize lending solutions to your needs. Meet our team and explore our solutions.