3 Pro Tips for Taking Out an Agriculture Loan

You’re starting your own agriculture business? Congrats!

By this point, you have seen just how expensive and daunting the task of setting up this type of business can be.

On average, it costs approximately $5,157,500 to purchase the land, and the equipment you need. Not forgetting all the training you’ll need to educate yourself on the ins and outs of agriculture.

So the real question is, how can you make it more affordable for yourself?

Well, it’s easy. You start by taking out an agriculture loan. This is a simple way to spread out the cost of your new business and help you get up and running fast!

We understand that taking out a loan can be scary (especially for this amount of money), but it’s actually pretty straightforward.

And if you keep reading, we will show you three tips that will simplify the process for you.

1) Know What You Want Before You Apply

If you want a loan for a specific reason, you should state it in your application. For example, if you need the money for something important, then tell them what that is.

Providing the lender with specific goals is far more compelling than providing general ones, and will help in your quest to get accepted.

2) Make Sure You Have Collateral

Lenders will not give money to just anyone, so if you do not have any valuable things that could be used as collateral, then the chances of getting a loan for an agricultural purpose are close to zero.

Generally, the more valuable an asset is, the better. That’s why many farmers offer their crops as collateral.

If you don’t have a cash crop, like wheat or corn on your farm, and only own chickens or milk cows, then you may want to apply for a loan with someone who can co-sign.

Your partner can provide their own valuable asset (e.g., land with a livestock auction barn) in exchange for a portion of the profits.

3) Be Ready to Prove Your Creditworthiness

Many agricultural loans are based on the amount of money you have and how much you owe. This means that if you do not pay, there will be a big penalty to the lender.

These penalties can even include giving up your farm. You can learn more right here.

If you have good credit, proving your creditworthiness shouldn’t be difficult. But if you have bad credit, it might take a lot of convincing before the lender agrees to provide an agriculture loan.

Make sure you do everything possible to improve your credit score prior to your application so that you can increase your chances of being successful.

Get the Best Agriculture Loan Advice

Hopefully, these three agriculture loan tips will help you get a better understanding of how to take out an agriculture loan. If you have any additional questions, please visit our blog.

We have many articles on the agriculture industry that will help answer any questions you may have.