Cattle production in the United States supplies 20 percent of the world’s beef demand. This industry contributes around $29.6 billion to the US economy annually. It provides jobs to a total of 1.4 million Americans. And not only does the cattle industry suffice the demand for food, it also helps the country’s ecology by providing habitat for a wide variety of flora and fauna.
But beef products are just the tip of the iceberg. Cattle products and their derivatives including milk and leather are used worldwide. Without a doubt, cattle business is one of the most precious contributors to America’s economy. Knowing this, ample of opportunities for the country’s ranchers and cattle farmers are made available to support this most important sector of American agriculture.
These opportunities often come in the form of loan programs that answer to the diverse needs of the cattle industry. From the smallest funding needs to long-term loans intended to help out farmers and ranchers in expanding operation, there are programs available.
These loans can take years, even decades or repay, and typically require borrowers to have sufficient collateral. If your purpose is to buy land or purchase heavy equipment, you will need to get a larger loan. You can also get ahold of lines of credit for some short-term needs. For specific purposes such as turning your conventional cattle farm into an organic one, or upgrading your water infrastructures, the USDA, via its Farm Service Agency (FSA) wing, may be able to give you assistance.
Farm Loan Programs under the FSA cater not just seasoned farm operators but also beginner farmers and ranchers. They also provide special loan programs for racial minority farmers and women producers, even rooftop producers and urban farmers.
The federal government, of course, is not alone in its aim to support the country’s farmers and ranchers. There are private grants and loan programs that offer equally diverse loan programs.
Getting a cattle loan
In choosing the right financing program for your cattle business, the first thing that you need to look into is the interest rate. The interest rate is basically the service fee, charged by your lender for the use (and its accompanying risk) in allowing you to use their money.
Cattle loan rates come in two forms: fixed rate and variable rate. Fixed interest rates do not change throughout the entire life of the loan, while variable interest rates reset after a predetermined time period, either resulting in a payment increase or decrease depending on factors determined by the prevalent market pressures.
It also matters how your interest is integrated into your monthly payments. Simple interest is calculated on the principal, the amount of money borrowed, over the lifetime of the loan while a compound interest is calculated each month on not only the principal borrowed, but also any accrued interest.
Another thing to look into is the terms of your loan. This is the span of time intended for you to pay off your debt. Remember that the longer your term is, the more you have to pay on interest. You may also schedule your payments. The typical setup is monthly, but there are programs that let the borrower pay in bulk, either by quarter every year, or on an annual basis.
Whether you’ve been in the business for decades, or just starting, borrowing capital is the norm. Take comfort in the knowledge that no matter the need, there is always a program you can get at a rate and return you can afford.