How to Get an Agricultural Loan

There is no doubt that farming can be a difficult job, but obtaining Ag financing to sustain and grow your operation should not be! Working with a agricultural lender that is knowledgeable about the industry and how best to structure credit will make the process of applying for and obtaining financing for your farm as simple as possible.

In this post, we will discuss a few basic steps that you can take to make your first meeting with a agricultural lender go smoothly. Remember, the better the quality of the information provided, the quicker that you will be able to get access to the financial support that your operation needs.

What to Bring When Applying for an Ag Loan

• Income statements - An income statement is a record of the revenues and expenses generated by your farm. Most commonly, your income statement will be reported on your individual or company tax returns. Your Ag lender will analyze your historical results to determine whether your farm business produces enough cash flow to service your debt. Be prepared to have a discussion with your lender about trends that they notice and where you are headed with your business.
• Balance sheet - A balance sheet simply includes a listing of what you own and what you owe on a specific date. Your Ag lender will want to examine the assets that you own versus how much you debt you owe on those assets to determine your net worth. Make sure to include the required payments and balances on all debts. If you need help creating a balance sheet, ask your lender for help.
• Business plan - A business plan will provide your Ag lender with a brief history of your farm operation and give details about the purpose of the loan. Whether you are requesting financing for cows, land, crop inputs, or equipment your lender will want to know how the funds will be repaid. If the new farm item or expenditure can’t generate enough new cash flow to pay for itself over a reasonable period of time, you may want to defer the purchase.
• Production information - A prudent agricultural lender will ask you about your farm operation. Be prepared to provide information such as milk production records, crop acreage, and flock settlements. This information will help your lender familiarize themselves with your farm.

Ag Loan Programs: What are all these acronyms?

As a farmer, you know that agriculture is very rewarding, but can be a risky business. There are several loan programs that can help you and your lender mitigate the risks associated with agricultural production.

Farm Service Agency (FSA): The Farm Service Agency was created to provide opportunities to family-sized farmers and ranchers to start, improve, expand, transition, market, and strengthen their farming operations. FSA provides both guaranteed and direct farm loans.

Small Business Authority (SBA): The Small Business Authority provides loan programs to many different businesses for fixed assets and working capital. The programs are not limited to farm operations, but farms are an eligible business.

USDA Business & Industry (USDA B&I): The USDA Rural Development loan programs are designed to improve the economic health of rural communities by increasing the access to business capital through loan guarantees that enable lenders to provide more affordable financing.

Agri-Finance is Easy with First Bank and Trust Company

At First Bank and Trust Company, we understand the unique challenges farmers face, and we're here to be your financial ally. Our agricultural financing solutions are designed to provide the support you need to cultivate and grow your operation.

Your agricultural dreams are within reach with First Bank and Trust Company. Ready to take the next step? Let's work together to ensure your farm thrives:

• Tailored Solutions for Farm Operations
• Solutions by Agricultural Industry
• Personal Banking for Farmers

Original Publish Date: May 26, 2017
Article Revised: May 11, 2023