Agriculture has come a long way since we first settled in aggregate societies and began producing our own food, instead of hunting and gathering resources. This shift paved the way for the development of civilizations and the bloom of agriculture. Today, agriculture has taken many forms and has evolved from the traditional planting and grazing process to include feedlots, orchards, fish farms, flower farms, honey, and even wind farms.
In the United States, agriculture contributes an estimate of over $130 billion worth of Agricultural produce to the American economy per year. We’re also one of the top countries worldwide who are major exporters of agricultural products. Nationally, one farm feeds 168 Americans annually.
Without a doubt, agriculture is one of the pillars of American economy. That is why much of our federal and private institutional efforts are dedicated to providing opportunities for our American farmers to prosper and continue their most important work.
These forms of assistance typically come as loan aids, grants, or programs that cater to farmers’ diverse farming needs. Different farm types have different operation requirements and therefore necessitate unique financing needs, especially when the operator puts his or her vision in the long term.
Many financing options are available both from federal and private institutions. The United States Department of Agriculture, for example, has several program types for farmers and ranchers of all experience levels, available via its overseeing body, the Farm Services Agency.
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Regardless of the type of loan you are to get, one principal need to make a wiser decision is to identify just how much financing you need. That is, the amount of money you should borrow. And given all the necessary input are available, borrowers gauge this using a loan calculator.
Using a loan calculator, the prospective borrower inputs all the necessary information such as the loan term and the desired amount to be borrowed. One tricky piece of information, however, is the interest rate. Understanding this is vital in helping the borrow arrive at the most precise figure to work with.
Breaking Down Interest
At its core, interest is the fee charged by your lender for using their money. Most interests are assessed annually, commonly known as annual percentage rates or APRs.
So how are interest rates determined?
There are various factors that help lenders determine the interest rates they offer you. These include:
- Rates set by the Federal Reserve
- Investor demand for U.S. Treasury notes and bonds
- The banking industry
As you can see, most of these are outside your control. But one factor that is borrower-dependent and which you can use as leverage for your borrowing strategies is your own borrower risk. This is determined by your credit score. Basically, the higher your credit score is, the better (lower) your interest rate will be.
Farm Ownership Loan
Rates are most commonly determined by risk. If you need a loan and has substantial savings to make the qualified down payment amount, you can get interest as low as 1.5 percent. For emergency loans, a rate of 3.75 percent is viable. Don’t hesitate to shop around for the best possible outcome. The best rates favor the most prepared borrowers.
Get farm financing today!