What's A Farm Loan?

Jan 03, 2024 By Susan Kelly

Farm acquisition loans, occasionally from family. To get funds out of a refinanced loan for use in funding conservation efforts, new plantings, machinery, and expansion plans. Establish non-conventional farming techniques such as hydroponics, aeroponics, vertical farming, and farming in shipping containers. Dealing with organic waste from both animals and plants Reduced monthly payments can be achieved by refinancing a current mortgage into a new, lower-interest farm loan with a shorter term.

The Most Popular Forms Of Farm Financing Include

  • Funding for real estate with interest rates that fluctuate every year
  • Ten-, fifteen-, twenty-, or twenty-five-year fixed-rate loans on agricultural property
  • 70% Loan-to-Value (LTV) available for farm and ranch purchases
  • Consolidating debts by obtaining a new loan
  • Growth capital
  • We accept payments on an annual, semiannual, and monthly basis.
  • No fees for paying it off early; amortization terms of up to 30 years
  • Up to 70% LTV, 680 credit score, and 50% DTI for well-documented loans.
  • We cap our loans at $3,000,000 with a 60% LTV.
  • Loans for 60-acre or more hobby farms are available to salary earners regularly.
  • The loan application process is streamlined to an LTV of 55% and a loan amount of $1,000,000.
  • Short-term financing for companies in financial difficulties with either minimal cash flow or severe credit deterioration (e.g., a recent bankruptcy filing).
  • Financing for farms at a maximum LTV of 65%
  • Competitively priced, non-government farm loans
  • Institutional funding for cannabis businesses with stable cash flow and real estate as security.
  • Aid for the financing of smaller farms

How To Acquire A Farm

Borrowers can apply for loans from financial institutions focusing on agriculture. When it comes to conventional finance, banks and credit unions are the go-to sources since they need extensive paperwork and high-quality collateral.

Many states are home to specialized banks and credit unions whose only focus is providing mortgages for agricultural purposes. Farm loans can be obtained from traditional financial institutions and private and hard money lenders.

Enter the specifics of your loan scenario (borrower, property type, credit, etc.) into the Lender Search above to be presented with a list of possible lenders who can fund a loan to match your needs. When you find a lender you like, click the "Contact" button to have your loan and contact information sent directly to that lender. The bank should contact you soon.

A commercial mortgage broker could assist a farmer in locating the most suitable lender. Mortgage brokers are used by every one of the lenders included on this site.

Hard Money Agricultural Loan

Straight-up cash Loan-to-value (LTV) ratios on farm loans, ranch loans, and other agriculture loans are often lower than those offered by traditional banks (35% to 50%). Hard money lenders may overlook previous bankruptcies, notices of deficiency, and foreclosures if the borrower has enough equity in the property (land) to guarantee payments.

Typically, less paperwork is involved than a traditional bank loan because the ground serves as collateral. For the same reason, hard money lenders are more inclined to provide loans for farms with less-than-perfect credit. The farm might receive the proceeds of cash-out refinance in as little as two weeks if the lender uses hard money.

What Financial Institutions Specialize In Farm Loans?

Specialty and commercial farm loan programmers are available from various financial institutions. You can use the search bar up top to discover how many of the more than 130 lenders in the database can provide funding for your client's mortgage.

Financing Options for Farms

Farmers can use loans for various farm expenses, including purchasing land, operating the farm, and expanding the operation. Both new and established farms can benefit from the availability of liquid cash that farm loans provide, especially if the latter has a cash shortage due to an unexpected expense or a seasonal difficulty. A farm loan can take several forms, including providing money for equipment, crops, and livestock or offering credit lines.

There is a wide range of available arm loans that depend on factors such as the size of the borrower's farm, the borrower's credit history and collateral, and whether the borrower is eligible for a loan through the federal Farm Service Agency (FSA) or a commercial lender's specially designed farm programmer. From a record high of over $7.5 billion in 2020, the FSA reported farm ownership and operating loans totaled over $6.7 billion in 2021.

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