A Brief Guide on Agriculture Lending

Farming needs numerous work hours, dealing and fighting with frequent weather changes, and the risk of the unknown is always present. It also needs a huge initial investment and additional extremely operational costs. That is the reason why it is a smart idea for existing farmers to opt for agricultural loans. Agricultural loans are an essential part of the lending portfolios. Most of the agricultural loans are targeted to help underprivileged farmers who are unable to pay for or to purchase farmland. By opting for such loans farmers can enjoy a wide range of agricultural services

Oftentimes, the best place to look for financing is through independent or private mortgage firms, who have experience finding loans from private and non-conventional lenders that can provide mortgages for agricultural projects, growth, and property acquisitions.

They can find financing for farm operations of all sizes, and mortgage products that include:

·         Fixed and variable rate mortgages

·         Equipment leasing and loans

·         Operating loans for everyday costs and supplies

·         Lines of credit

·         Equity-based loans

Using the Experience of Brokers

For farm mortgages or agricultural loans, look for a brokerage that has specialized departments for agricultural financing, and that understands the unique financing that works best for such operations.

There are many reasons why borrowers seek farm mortgage products, including for:

·         Agricultural land acquisition

·         Expanding farming operations

·         Construction and land improvement projects

·         Debt consolidation and reorganization

·         Purchasing equipment or livestock

Farm loans can also come in packages that include funding for property acquisition and development, as well as for purchasing supplies like equipment, feed, crops, and livestock.

Who is Eligible for Farm Mortgages?

Whether you are an experienced, full-time farmer or looking to buy a hobby farm, financing is available as long as you can demonstrate the ability to manage and run the operation successfully. Even if you do not have other sources of income, a private broker can help find you long or short-term financing that will be tailored to your farm's specific requirements, with the flexible terms and low-interest rates you need to develop or grow your operation.

To qualify for a farm mortgage, borrowers must be of legal age, and permanent residents.

Applying for Your Farm Mortgage

Most farm mortgages are determined by available income, so it is very important that all your finances are in order, up-to-date, and can be supported with documentation.

The value of the loan you are entitled to will be based on the assessed value of the property, and some firms are able to finance up to 80% of that value. And even if you are involved in an industry related to agriculture, you may still be eligible for the same types of farm mortgage financing.

Most agricultural mortgage products have available amortization period with interest rates that can be fixed. Most private firms allow you to choose if you want to make payments monthly, semi-annually, or annually. And if you have some extra money, look into whether your loan agreement allows you to make prepayments.