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Agricultural Land Financing

Agricultural land financing helps farmers to run their farms efficiently. Keeping up the farm in the right track is difficult not to mention the costs of running the farm.

Thus, farmers seek for agricultural land financing to help their farm stay afloat.

Farmers, ranchers, aquatic product harvesters and other businesses of similar types are included in the agricultural industry. These businesses usually require big amount of funds to pay for land, purchase equipment and facilities necessary in producing items generated from their land. Farming is a kind of cyclical business in which farmers invest in other items prior of harvesting their products. In this sense, oftentimes farmers have no other choice but to seek for financing to offset the periods when the cash flow is low.

How to Use Agricultural Financing?

Agricultural financing can be used if a farmer plans to purchase farm land. You can apply for agricultural land loans if you want to build and expand current farm. The fund is also perfect to cover the operating expenses such as purchasing farm equipment to run the farm efficiently. Likewise, you can also use the fund in marketing the product. In this sense, it is important to borrow funds to cover the expenses of marketing the products. Before you decide to apply for agricultural financing make sure to think about how you will use the fund.

Sources of Agricultural Funds

Government- sponsored agency provides agricultural land financing. An example of this is the Farm Credit Administration that operates with other member banks. Qualified farmers can apply for agricultural loan that can be used in maintaining current farm as well as in expanding the farm land. On the other hand, you can also apply for grants from the state and federal government. However, it is quite difficult to acquire the grants because of the limited scope. Usually, agricultural grants are provided for development and research purposes. Because of the restrictions, many farmers avoid applying for grants not to mention the time it takes in processing the fund as compared to regular loans.

Another option where you can apply for agricultural land financing is from traditional banks. You can apply special loans from credit unions, banks and other lending company that offer agricultural financing. Nevertheless, this option is different from regular loans because it requires down payment, loan terms, interest rates and repayment schedules. In addition, there is a set amount a farmer can take for agricultural financing when applying from banks. Whatever option you may choose it is important to take into account to make a smart decision if it is necessary to obtain agricultural financing loan. Keep in mind that once you obtain loan you should ensure that your farm can generate produce enough to cover the repayment of your loan. As much as possible, you should use the fund purposely otherwise it can pose further financial problem.

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2 Comments

  • Edmund Jhairajen said on July 1, 2011
    I owned 9.5 acres of agricultural land fully paid. For expansion I am seeking for agricultural land financing. My farm is located in Semenyih Selangor Malaysia. Please guide me about loan application. TQ
  • Bhaskaran said on September 29, 2015
    we among our relatives formed a company called Greenable Farm SDN BHD. company registered in Selangor, our aim in to manage land belongs to long house approximately 2000 hectare at Batu Niah region Sarawak to grow palm Oil Plantation and keeping the land owners as stake holders too. our paid capital is approximately RM 200k and the project required sum RM 30 million in stages over 4 years. How could your institution can fund us.

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