How to Finance the Growth of Your Farming Operation


Agriculture is a necessary component of our existence. As a way to provide food for the community, you may find that you want to not only own a farm, but also eventually expand it. In order to expand your operations, you’ll need capital. If you don’t have the cash lying around, you’ll need some type of financial assistance. Luckily, there are several options available.

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Line of Credit

Are your farm expansion needs within limits? In other words, are your capital needs small? You may be able to satisfy the needs with a line of credit. This loan will provide you with access to the capital you need when you need it. Just like a credit card, you’ll receive revolving funds, meaning you can continually use the funds as you pay them off. This can be the perfect answer to your needs for future capital. As you pay off one expense, you can finance another, continually expanding and growing your farm.

Term Loans

Are you looking to buy a specific piece of equipment to expand your farm? If your expenses are a one-time occurrence, term loans are also a great alternative. The term the bank can provide is based on the length of time the equipment is expected to last. This way you get a term that is affordable to you, yet doesn’t have you paying for something that you no longer own or that is no longer in operation.

Term loans often have a variety of repayment terms that help you find the one that fits within your cash flow. You can also choose from a variety of terms including fixed or variable rate, depending on which payment fits the best within your means. Term loans do not provide revolving access to your cash, though, so they are best suited for one-time expenses.

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Are you looking to expand your farm by adding buildings or other structures? If you can use the building nor structure as collateral, you may qualify for a mortgage. A mortgage loan will typically come with a much longer term and possibly more affordable payment. Of course, the tradeoff is the higher amount of interest you will pay on the loan because of the longer term.

You can find mortgage products for farm expansion with terms that start at 5 years and go all the way up to 30 years. You’ll even find flexible payment options that include monthly, quarterly, and semi-annual payments. You can choose the payment option that fits the best with your income stream throughout the year.

Farm Real Estate Loan

Finally, if you are trying to expand your land ownership, you may want a farm real estate loan. You’ll use the farmland as collateral for the loan, which will offer flexible payment options to meet your cash flow, a variety of interest rate and term options, and the ability to expand your farm.

Expanding your farm is not as hard as it might seem. No matter how strapped for cash you are at the moment, if you have a good farm business plan in place and can show the bank the benefits of providing you with the cash, you’ll have many options at your disposal.

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