The coronavirus pandemic, which began in late 2019, is not over yet, and all this time misery has been present all over the world. Still, in every situation we need to find silver lining. In this case, we need to think about what the pandemic has taught us, and it has also reminded us of many things we have forgotten.
The primary thing most of us have forgotten, and now we are aware of again, is that when hard times come, nothing is worth as much as food. All the other fancy businesses that otherwise look very important become completely irrelevant when something like a pandemic happens. And then we realize that agriculture and farming are what you can’t do without. This is exactly what impelled many people to leave the big cities and return to smaller areas, in order to engage in agriculture and farming.
We also realized that only if we have our own property can we be free even when lockdown is imposed. However, the costs you will have, whether you are just starting out or being a farmer your whole life, are very high. And so it is possible that you will need some additional funding. That is why both beginners and experienced farmers will be interested to find out things you should know about agricultural finance & farming loans.
1. What is agricultural finance & farming loans?
Many are not sure for what needs agricultural finance & farming loans can be sought, so we will explain it to you first. Of all the types of loans, this one comes in perhaps the most different forms. Virtually everything you can imagine that has to do with agriculture can be financed in this way.
2. Reasons for applying
The first reason you can apply for a loan is to buy or expand your current property. Start-up loans are very affordable because states generally stimulate the start of this type of business. Also if you want to buy more land or expand the farm, you can apply. Then for any equipment purchase needs. This includes all the machines you need for farming, as well as all the machines you need to run a livestock farm. It is not even necessary to plan to buy machinery, leasing is another available option. That is very often the most profitable option for small businesses. To learn more about leasing agricultural machines, visit this link.
In case you need money to build silos, barns, chicken sheds and so on you can apply for financing. You can get a loan even for a marketing campaign to place a product on the market. As you can conclude, whatever need you have that is in any way related to working on your farm, you can apply for a loan that is likely to be granted to you. But of course, there are certain rules, so it is not 100% sure you will be granted one.
3. Youth loans
For decades, there has been a trend that young people do not want to stay in the countryside and engage in agriculture, but go to big cities in search of other jobs. This leaves catastrophic consequences in the long run, because there is no one to inherit farms and family businesses, which leads to the collapse of small communities and also negatively affects food production.
That is why, if you are young, you can apply for a youth loan on very favorable terms. So you can buy land or livestock and start your own farm. Or expand what your family already owns. Even in that way, education in the field of agriculture can be financed. It is certainly an opportunity that young people should take advantage of because it is not always the solution to go to a big city.
4. Emergency loans
Another type of agricultural loan is an emergency loan that can save a farm after damage has occurred. Damage usually occurs as a result of drought, forest fires, tornadoes and other natural disasters. In those moments, it happens that the rancher loses everything and that there is no way to recover from the damage suffered except to apply for a loan. The conditions are also favorable because the goal is recovery and then the interest rates are not high. Otherwise, farmer would never recover from such events and one more farm would be deserted.
5. Credit score is important
We all know how important a credit score is when we want to apply for a home or car loan. The same is the case with this type of loans. Although interest rates, installment repayment terms and more vary, a good or bad credit score will have a big impact. In addition to having an impact on whether your loan will be approved, it will also affect the interest rate and the monthly installment.
That is why it is important that you always take care of your credit score and repay everything on time. It takes years for your credit score to be good, and just a few mistakes can ruin your credit score so you practically never recover. Because lenders will have access to your credit history and will know if you have ever been in arrears.
In case you have a farm for many years and do not need any major improvements but you still need extra money to buy a machine or repair a barn that was damaged during a hailstorm, for example, then a microloan is a good choice. These are loans where you will get a small amount of money and the repayment period is very short.
This is exactly what many farmers need. In that case, the landers will check your credit score, but your financial status will be even more important to them. If you have a lot of land and machines, then it is considered that your financial status is good and that you will repay the microloan on time.
If this is the career you have chosen, know that you have made a great choice. However, there will be plenty of adversities that you will encounter. This is normal, because you depend a lot on the weather and other factors that you cannot influence. This does not mean that you should give up, on the contrary. But if you need extra money, there are agricultural finance & farming loans.