Agricultural Loan: What It Is and How to Qualify for One
posted on Thursday, June 10, 2021 in Financial Tips
Running a farm won’t always be a breeze, especially in the financial department. You may encounter hiccups like natural disasters that could affect your business’s profitability. If you find yourself in this situation, consider taking out an agricultural loan. This will provide you with the necessary funds to bounce back and keep your business afloat.
How Do I Qualify for an Agricultural Loan?
The qualifications will vary depending on your chosen credit union, but here’s a list of common agricultural loan requirements.
Credit requirements will vary from lender to lender. Still, aim to score a minimum of 660 from at least one of the three major credit reporting agencies— Equifax, Experian, and TransUnion.
- Experience/Years in Business
The guidelines for this criterion will depend on the loan type and purpose. For instance, farm ownership loans require at least three years of experience running a farm or ranch.
Lenders may require proof of income like a financial statement. This helps them ensure that you are capable of repaying the loan.
When Should I Apply for One?
Agricultural loans can be used for different purposes. Here are some cases where this type of funding might be beneficial for your business:
1. Purchasing a Farmland
Agricultural land loans can provide you with the capital to purchase or lease a piece of land. It’s also an excellent option for long-time farm owners looking to improve or expand their current operations.
2. Paying for Operation Expenses
An agricultural loan can also aid in covering operational expenses. For example, it can be used to purchase new equipment and farm supplies like feed, fertilizer, pesticide, etc.
3. Covering Marketing Costs
While investing in marketing is uncommon, it may benefit your business later on. It will help you showcase your products and reach your target audience. However, hiring a professional team won’t come cheap. This is where an agricultural loan will come in handy.
See Your Farming Business Grow!
At Community 1st Credit Union, we offer a wide range of funding options like agricultural land loans, farm equipment loans, and operating lines of credit. Reach out to us today to find out what you need to qualify for our loan programs. If you have questions or concerns, we’re happy to assist you!