Farming is one of the oldest forms of business in the U.S. And while it’s still alive and well today, it’s a very challenging but rewarding industry in which to make a living. It requires investments, and those investments might come in the form of external financing.
The chances are that if you are running a farm, or thinking of doing so, you will probably look into small farm loans at some point.
Where is the best place to get small farm loans?
What are the best options, and who offers them?
There are many potential sources for financial help, but don’t worry, we’ve done some work for you by whittling down your options. Here, we’ll take a look at five of the best small farm loans. Our selection includes two government-backed loans as well as three from private lenders.
Top 5 Small Farm Loans
Farming isn’t for everyone. There are long days and sometimes grueling work in extreme climates. But those who call themselves farmers love the work and are proud of what they do.
At the same time, they need help from time to time to get them through difficult seasons, to move their business forward, or to get their business off the ground. No matter what stage of farming you are in, you’re sure to need assistance from small farms loans somewhere along the way.
Here are the top 5 small farm loans that can help you grow your business.
USDA Farm Loan
The United States Department of Agriculture (USDA) offers a variety of small farm loans that are specific to farmers. Through the Farm Service Agency (FSA), the USDA gives farmers many choices.
Some of the loans the USDA has are offered directly from the agency, while third-party lenders provide loans guaranteed by the USDA. For most of these loan options, the USDA will set the loan terms as well as the maximum loan amount and maximum interest rate.
One of these loan options is Farm Operating Loans. This funding option is available for up to $300,000, with loan terms of between one and seven years, and a maximum interest rate of 2.875%.
The USDA has a set of criteria to determine who qualifies for this loan program. Generally speaking, your business needs to qualify as an eligible farm. While there is no set minimum credit score required, the USDA does require that you have an acceptable credit history.
You have to be a U.S. citizen, non-citizen national or legal resident alien with a Social Security number.
While they don’t specifically offer small farm loans, the Small Business Administration (SBA) does offer loan programs that could be a good fit for farmers. These loans are offered through private lenders, and then the SBA guarantees a portion of them.
The most popular option here is the SBA 7(a) loan program. You can qualify for up to $5 million to acquire land, purchase equipment, and use toward other business expenses.
The SBA sets interest rates at prime plus a maximum markup of 4.75%. Repayment terms are typically offered up to 10 years, or up to 25 years if you’re using the funds to purchase land. Loans are also offered with fixed and variable interest rates, depending on the private lender you use. Lenders can also charge fees for SBA 7(a) loans, up to 3.5%.
To qualify for these small farm loans, you must have a minimum credit score of 680 and not have any bankruptcies, defaults on prior government loans, or foreclosures.
You have to have a Social Security Number to apply.
Farm Credit Services of America
The Farm Credit Services of America is a customer-owned financial cooperative that’s focused on helping farmers like yourself. The organization gave out more than $5.6 billion in loans to young, beginner, and small farmers in 2018 alone.
They offer a variety of options for small farm loans, including intermediate-term loans. These loans provide the flexibility of fixed, interim-fixed or variable rates, flexible payment options (monthly, quarterly, semi-annual or annual) and quick credit decisions.
Loans of up to $300,000 are available, with interest rates as low as 5.5%, and loan terms of up to 30 years.
You must have an acceptable credit history to qualify and must have a Social Security number.
AgAmerica Lending offers loans and lines of credit to farmers throughout the country who want to refinance debt, buy land or expand, or increase working capital for their farms.
One option they offer is a short-term bridge loan that will help you get through a challenging time. To be approved, your property also can’t be in either Nevada or California.
The minimum loan amount for this type of small business loan is $300,000, with a maximum loan to value ratio of 50%. Repayment terms offered are between 12 and 36 months.
Interest rates will vary depending on your credit history.
You must be a U.S. citizen, permanent resident alien, or U.S.-based entity with a Social Security number to qualify.
American Farm Mortgage & Financial Services
As a subsidiary of Legence Bank, this company is focused on offering several small farm loans to help people in the industry. One of their products is a beginning farmer and rancher loan.
Some of the requirements to qualify is that you must meet FSA loan eligibility requirements, which means a minimum credit score in the 600s. For a first mortgage loan, the loan term is 30 years. They offer flexible payment structures and competitive interest rates.
The first 15 years of the loan term can be a fixed interest rate. The rate you will get depends on your credit history.
The maximum loan amount is typically $333,650, though it can be higher depending on the purchase price of the land. You also must make a down payment of at least 5%.
You need a Social Security number to apply.
Your best alternative: a Camino Financial loan
Another excellent option for your small farm loan is to turn to Camino Financial. We offer loans to businesses that have been in operation for at least nine months and earn at least $30,000 in annual gross sales. You must own at least 50% of the farm.
Your farm must be located in the U.S., except in New Jersey, Hawaii, and Puerto Rico.
You can have either a Social Security number or ITIN to apply.
We offer loans to people who don’t have a credit history, too.
Our small business loans offer fixed annual interest rates between 12-24.75%, with a payback period of 24 to 60 months. Our loans range in size of between $10,000 and $400,000, with a 5% origination fee and no early payment penalty.
The great part about small farm loans from Camino Financial is you can get your funding within two to 10 days. Also, after you make 8 timely payments, you can graduate to a better loan with more time to repay.
You’ll also access all of our free resources and newsletters that can help your business grow even more!
Top Small Farm Loans: Comparison
|Loan amount||Interest rates||Fees||Time to pay||Accept ITIN?||No credit history accepted?||Time to fund|
|USDA Farm Loan||Up to $300,000||2.875%||N/A||1-7 years||❌||❌||60 days|
|SBA loan||Up to $5M||7.75-10.25%||Up to 3.5%||10-25 years||❌||❌||2-3 months|
|Farm Credit Services of America||Up to $300,000||As low as 5.5%||N/A||Up to 30 years||❌||❌||Within a week|
|AgAmerica Lending||Minimum of $300,000||Varies||N/A||12-36 months||❌||❌||Within a week|
|American Farm Mortgage||Up to $333,650||Varies||N/A||30 years||❌||❌||Within 30 days|
|Camino Financial||$5,000 to $400,000||Starting at 12% (annual interest rate)||5-6.99% origination fee||24-60 months||✔️||✔️||2-10 days|
Realize your farm’s full potential
As a farmer, your day-to-day job is challenging enough. You shouldn’t have to fight your way to get the funding you need to get you through tough times or to help you start or grow your business.
At Camino Financial, we are dedicated to helping small business owners just like you. We do so by providing excellent small business loans to our customers, as well as educational programs, to keep you on the right track.
It’s how we live up to our motto of “No Business Left Behind.”
Apply for a business loan today and get your business moving forward!