How to Secure a Loan for an Agricultural Land
When you’re looking for a farmland loan to expand your farm operations and buy new machinery, you may find it a bit challenging. Several dedicated government agencies and traditional lenders are willing and able to help you secure a loan to expand your agribusiness.
However, to qualify for an Ag land loan, you will need a good credit score and proof that you can fully repay the loan. There are other factors that you should also consider when you opt for an agricultural land loan.
What to Consider When Applying for an Ag Land Loan
Loan Amount: You could be looking for a small short-term loan to buy equipment or help your farm go through a dry spell. Most agricultural land loan lenders are looking for borrowers who want a higher amount. Therefore, you should search for different lenders available and go through their loan offers. Discuss all the financing needs the lender offers to ensure they suit your needs.
Repayment Options: How long will it take to service the loan? When applying for an agricultural land loan, you should go for one that you can pay quickly. Consider interest rates and how many months the loan is spread for paying. Some lenders provide an option to make interest-only payments when you start earning revenue from your business during the harvesting season.
Maximum Loan Term: You should consider the maximum loan term when borrowing to expand your agribusiness. The loan term is the amount of time it would take to repay the loan fully, like a year or two. To determine the maximum loan term, you should project your income for a given period and establish whether you’ll be in a position to repay the loan comfortably.
Hidden Fees: It is also essential to look into the hidden fees the lending institution charges on all loans. Some hidden fees to consider include application fees, monthly fees, late payment fees, and establishment fees. Ask the lender to specify all the fees you should pay before borrowing. This way, you can easily tell if you qualify for the loan and whether you’ll be able to repay it comfortably.
How to Secure Ag Land Loan
With a good credit score, you can turn to any local bank in your area and apply for a loan to finance your farming business. You can also get a guaranteed loan for agriculture from the government. To qualify for a bank loan or a government agency, you need to have your business plan and a good credit score.
Whether you are looking for an Ag land loan to improve your agribusiness, buy new machinery, or market your farm products, you can still find the best lenders in the industry. United Farm Mortgage offers low-interest agricultural land loans for small and large farms. You can apply for their agricultural loans if you want to purchase farmland, cover operating expenses, and market your products. When looking for an agricultural land loan, you should consider the factors we’ve highlighted here and search widely for the best offer available.