Farm loans are an excellent way to fund your agriculture business, providing attractive fixed, variable, or adjustable-rate loans that meet your specific needs. In order to qualify, financial records and plans of operations will need to be presented for review as part of your application for financing. It is therefore imperative that good recordkeeping habits be observed while applying for farm loans.
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Farm loans Hoover AL provide financing that allows farmers and ranchers to acquire or expand their family farms, increase agricultural production, protect soil and water resources, develop new markets, as well as support beginning farmers and women farmers through Farm Service Agency loan programs. Eligible applicants may apply for either regular direct or guaranteed farm ownership loans as well as down payment loans or microloans from this agency.
Farming and agribusiness require substantial amounts of capital. World War I saw an unprecedented boom in land and product demand; however, after World War II ended due to overproduction and the Great Depression, land and commodity prices dropped drastically, leaving farm families in financial straits again and elected leaders searching for solutions. Two laws passed that broadened the scope of Farm Credit System and created 12 Federal Intermediate Credit Banks funded with investments from U.S. Treasury bonds as potential solutions.
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Financing farm equipment comes in many forms, from traditional loans and specialty programs, such as USDA Guaranteed Loans available through local lenders. These loans offer reduced risk for lenders by being guaranteed against losses up to 95% by the USDA while offering lower interest rates than alternative lenders.
Farmers who can take out loans to purchase used equipment also save money since the price depreciation doesn’t happen as rapidly with new equipment. Before availing yourself of such loans, though, be aware of their terms and conditions as some lenders require collateral while others don’t; also be mindful that loan terms affect both monthly payments as well as total financing costs.
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Farm credit systems are customer-owned financial institutions that offer loans and financial services to farmers, ranchers, rural homebuyers, agribusinesses and forest landowners. These cooperatives offer competitive rates while sharing in their profits through patronage.
The federal government offers both direct and guaranteed loan programs. Guaranteed loans are provided by commercial lenders and guaranteed against loss by USDA; direct loans are made available by FSA which also provides credit counseling and supervision services.
Farm Operating Loans provide farmers with funds needed for livestock, seed, equipment and more. They can cover living expenses while getting a new farm up and running; as well as provide interim financing during harvest season through storage loans such as the Sugar Storage Facility Loan.
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Some lenders that specialize in agriculture provide farmers with a wide range of financing solutions. These lenders generally feature easy applications and may be able to deliver funds within two or three business days; their qualification requirements tend to be more relaxed than traditional lenders and government lenders.
The USDA provides numerous loans designed to assist individuals with starting or expanding farms, including direct farm ownership loans, down payment loans and microloans designed specifically for truck farms and Community Supported Agriculture operations. Repayment terms, maximum loan amounts and interest rates differ between programs.
Hobby farm loans provide individuals who wish to start small-scale farms for personal enjoyment the chance to start one with loans typically covering under 50 acres, used for purchasing equipment, land and livestock.
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Over the past century, farm credit has contributed significantly to the expansion and diversification of America’s food supply. Farmers using farm credit were able to meet consumer demands for different varieties of foods while accessing technology needed for efficient agribusinesses.
FSA provides loan products designed to assist both beginning and established farmers and ranchers purchase land, purchase livestock and equipment as well as cover operating expenses and cover family living costs while expanding and marketing their products. Furthermore, disaster assistance may be provided in order to assist agricultural operations recovering from natural disasters.
FSA also provides loan programs specifically targeting minority and women farmers and ranchers. A portion of all loan funds is dedicated to financing beginning farmer/rancher operations through the Direct Farm Ownership Down Payment Loan. In order to be eligible, applicants must be beginning farmers/ranchers.