Understanding the Basics of Agriculture Loans in the US

Understanding the Basics of Agriculture Loans in the US

Being a farmer can be tricky because of your business’s expensive supplies, farmland, and seasonal ups and downs. But this complete guide will help you understand the basics of agriculture loans. Learn how this type of loan can help you and how to qualify. 

What is an Agriculture Loan?

An agricultural loan is a type of loan that allows farmers to be more productive, yield more crops, and earn more money. Many farmers need help affording the costs of running a farm, so they look for low-interest loans that will allow them to keep running their businesses. 

The government and some lending institutions offer agricultural loans to allow farmers to stay afloat without the high interest. 

How Agricultural Loan Can Help

What does an agricultural loan do for farmers? Here are some options you can consider. 

Buy Farm Tools

Do you need a tractor or irrigation system for your farm? Perhaps you need seeds and dirt for your vast piece of land. But these items come with a hefty price tag. 

You can purchase this equipment if you qualify for an agricultural loan. The higher the loan amount, the better and long-lasting your tools will be. Research these items’ prices and options to make sure they suit your business plan. 

Cover Land Costs

If you don’t have much to farm in yet, you can get an agricultural loan to purchase or lease one. Consider the type of farming you will do in your company and the ideal location for your crops. Aside from these factors, it would help to weigh how much farmland you need and its cost. You should also provide something as collateral to obtain a loan. 


You can consider refinancing your outstanding agriculture loan for lower interest rates if you want to save money. Remember to analyze its pros and cons before deciding to get one. Discuss it with your financial advisor and see if this option makes sense to you.

Storms and Other Disasters

The USDA Farm Service Agency can be your saving grace to rerun your business after a natural disaster. Whether you experienced drought, storm, tornado, or insect infestation, you can quickly recover through a loan and make ends meet. 

Other Uses

Here are other ways an agricultural loan can help you.

  • Operating costs.
  • Seasonal ups and downs of business.
  • Investing in growth.
  • Land improvements and repairs.
  • Marketing campaigns.

How to Qualify for an Agricultural Loan

Here are some ways to qualify for an agriculture loan. 

Contact Lenders

Every lender has its own requirements to allow you to get into their agricultural loan program. Most of them look at your credit score. For example, a minimum of 660 is required if you get a Farm Plus Financial loan. Some want you to have a business plan before getting a loan. 

Familiarize Yourself With the Type of Loans

You can get different types of agricultural loans, depending on your needs. For example, do you want farm ownership or an equipment loan? Remember that lending institutions have dedicated experts to review your eligibility on these different types.