First Time Farmer Loan Basics
You could need a loan for all types of farm-related expenses. You will likely need to purchase equipment, implements, inputs, livestock, and most importantly: land. To purchase land, you would need a farm mortgage. For just about everything else, a farm operating loan. Mortgages usually have a longer repayment period (i.e. 30 year fixed-rate mortgage with monthly payments). Operating loans are an annual loan that a bank provides at a low-interest rate so you can fund everything for your operation in that fiscal year. Commonly, operating loans have a single repayment date at the end of the loan term.
When a new farmer is looking for a loan, there are a few different places they can go to secure the capital they need to start their farm. They can drive into town to the hometown farm bank and strike up a conversation with the loan officer. You may need to schedule an appointment. Once it comes time to apply, be ready to fill out a stack of paperwork for the application.
New farmers can also work with Farm Credit Banks that offer loans for agricultural needs, specifically over larger territories throughout the United States. They have been in existence since 1916 and have the express purpose of assisting rural communities.
There are also a handful of government loan programs provided by the Farm Service Agency and the US Department of Agriculture to help beginning farmers and ranchers. Government loan programs can be helpful to get a new operation running but usually require lengthy application and approval processes as well as loan requirements that other lenders may not have.
There are also digital intermediaries, like AFF, that provide a quick, easy digital application and approval process that can set borrowers up with multiple lenders that may best suit their needs.