According to the 2017 Census of Agriculture, new and beginning agricultural products account for over 26% of all producers in the US. This new generation of farmers is critical to keeping agricultural supply levels high.
Funding is one of the key roadblocks for beginning farmers who are considering starting or expanding a new farm. Agriculture loans can help bridge this gap. If you are trying to obtain funding for your new farm, here is how to choose the best loan for you in 2022.
First Time Farmer Loans
The FSA offers first time farmer loans through their “Beginning Farmer” direct and guaranteed loan programs. This program includes a few sub-types of loans depending on what you intend to use the money for.
Farm Ownership loans can be used to purchase land and access capital. Operating loans help beginning farms pay for normal operating and family living expenses. They can also help in diversifying operations, entering new markets, and other goals.
There are also Microloans that can help provide financial assistance at the very beginning when funds might be tough to come by.
Beginning farmer loans are generally open to those who have not operated a farm for over 10 years and whose acreage meets certain size requirements.
Farm Land Loans
If you are looking to purchase or expand a farm or ranch, a farm ownership loan will be helpful. These types of loans can help cover closing costs and the purchase of land.
In addition, they can be used for building or improving buildings on the land and conserving and protecting soil and water.
Agricultural Home Loan
The USDA Home Loan program helps people in rural areas with low incomes qualify for a mortgage. The definition of rural is quite broad in order to make it available to more people. There are a number of qualifications you must meet in order to qualify for this type of loan.
Selecting a Lender
Guaranteed FSA and USDA loans are offered through local lenders. Many times, you can apply for the same type of loan from different lenders. Some lenders may also offer their own lending products. Because of this, it’s important to carefully choose your lender.
One of the biggest factors to consider is that the lender will understand your needs and goals. They should have plenty of experience with agriculture loans since this will help them give better recommendations and create a better loan package for you.
A lender like https://www.myunionstate.bank/business/commercial-loans-and-lines-of-credit/agricultural-loans-and-lines-of-credit can help you choose a loan that works for you, while being there for your future needs.
In addition, your lender should be competitive when it comes to its services, rates, and terms. Getting lower agricultural loan rates can help you save a lot of money over time. Also, look for upfront communication about these factors.
Finding a lender that you can build a relationship with can go a long way. The agricultural industry is diverse and has different needs than other industries. Building a relationship will allow you to have a better experience for years to come.
Choose the Best Agriculture Loans for Your New Farm
If you are looking to start or expand a new farm in 2022, you’ll have a variety of options when it comes to agriculture loans. Make sure to choose the type of loan and lender that best fits your needs and goals.
If you found this article helpful, be sure to check out our other business and money articles too.