There are just over 2 million farms in the US. The number of farms has declined over the last decade.

Increased competition, consumer price sensitivity, and big-ag make it very hard for families to make a living farming.

Many turn to agricultural loans to give them capital so they can expand operations and compete in a tough environment.

It might seem like a possibility for you, but you’re bound to have a lot of questions. What are the agricultural loan requirements? What are the loan options for farmers? What does it take to get a loan approved?

Keep reading because we have the answers for you and more. Take a look to learn how to get loans for farms.

What Are Agricultural Loan Requirements?

Agricultural loan requirements are the minimum standards that borrowers have to meet to get approval. These vary depending on the lender and the type of agricultural loan.

Lenders want to make sure that you have the necessary resources to repay the loan. They look at your past history to determine if you can repay the loan.

They take on a significant amount of risk when they lend money. Loans that go unpaid put the lenders in jeopardy.

Some lenders’ agricultural loan requirements ask to see the last three years of tax returns. They’ll want to see your current income with recent financial statements.

Depending on the loan amount, they might ask for collateral to secure the loan. This is standard if the loan gets used to purchase equipment.

The equipment secures the loan, so if you fail to repay the loan, the bank recovers its costs by reclaiming your equipment.

Different Types of Loans for Farms

Does your loan have a specific purpose? There might be a type of loan for it. For example, you can get livestock and equipment financing.

You might want to get a line of credit. This functions like a credit card. You have access to a maximum amount of money, which is your credit limit.

You can use all or part of the amount of credit. You pay the credit down until your balance hits zero.

How to Get an Agricultural Loan

You should work with a lender in your area to see what your financing options are. Get your documents together and see what you’re eligible for.

You may need to utilize your personal credit score to get approved for a loan. If you do, make sure you check your score and it’s in good standing. You don’t want late payments or other issues to appear. 

Read Also-Top Factors We Should Look at Before Opting For Mortgage Loan

Get More Competitive With Agricultural Loans

Agricultural loans are a sure way to get the funds you need to operate and grow your farm. There are several different types of loans for farms available.

Pick the one that’s right for your situation and where the agricultural loan requirements are manageable. That’s how your farm will remain competitive for years to come.

For more great tips to help you run the business side of your farm, check out the Business section of this site.