Best Business Loans for the Agricultural & Farm Business
Farming is not just a career it’s a passion and a lifestyle. Farmers are closely connected to the community and take great pride in their business. But being a farmer or rancher can be quite challenging and requires attention to all the details involved in becoming successful. Finding the right agriculture business loan solution can make a significant impact on farmers and ranchers in the long run.
There is a lot to consider when financing your Agricultural business. From managing working capital needs and the agriculture business as a whole — having a variety of farming loans available can be a lifesaver. Throughout the United States, agriculture business after agriculture business are perusing the options available to them in order to help grow and succeed. The following is a list of challenges that have to be managed.
• How much to sell your product and when do you expect to see a profit?
• What equipment do you need? Who will fix it?
• How will you cover the costs of insurance premiums?
• Mortgage or rent?
• Labor Costs
• Transportation Costs
• Economic Market Changes
• Emergency contingency plans (A plan also considers the things that might go wrong and how to prepare for the unexpected.) Do you have a disaster plan?
• Federal, state, and local food safety regulations in the United States (local ordinances, land use issues)
• Environmental issues
AdvancePoint Capital can provide that working capital to Agricultural & Farm Businesses like yours for running the business and meeting those financial challenges. We offer a wide range of loans to farmers who need them the most. Our loans for farms range from short term solutions and small business loans to financing options for long term needs and SBA alternatives. Discover your next agriculture business loan today.
The 8 Best Business Loan Options for the Agricultural & Farm Business
Long-Term Business Loans for Agricultural & Farm Business
Long-Term agriculture loans are defined as a loan for a farm that has a repayment durations from 2 to 25 years. You receive a fixed lump sum upfront, with a fixed term in years, fixed monthly payment with principal and interest rates. Due to the length of repayment, long term business loans have high credit standards and are typically only for established small businesses with at least 2 to 3 years of business history. Expect a significant amount of paperwork to get approved.
Benefits of Long-Term Small Business Loans
- Low-interest rates
- Length of repayment of 2 to 10 years
- Monthly payments
- Ability to access a lot of Capital versus other shorter-term agriculture loan products
Business Line of Credit for Agricultural & Farm Business
A Business Lines of Credit is an open revolving line of credit that operates like a credit card in that farmers and ranchers can get approved for a credit limit and can take draw money on demand at any time up to the credit limit. You are only responsible for paying interest on the monthly principal that is outstanding and your payment frequency is a monthly payment.
Highlights of Business Lines of Credit:
- Lower costs and fees than that of other business funding’s
- Only responsible for the interest on the outstanding balance
- Flexibility. Draw money on-demand 24/7 as you needed for working capital
- Great for cash flow issues
Short Term Loans for Agricultural & Farm Business
A Short Term Business Loan is an option when other more traditional loans are not accessible. This type of agriculture business loan has a fixed lump sum over a fixed term (usually 6 to 18 months) with a fixed factor cost unlike that of a principal and interest loan of a business line of credit. Payments are monthly, bi-monthly, weekly, or in some cases Monday-Friday directly out of business bank account via ACH. These agriculture loan products can be used for various uses throughout the agriculture business such as working capital, expansion, and more.
Highlights of Short Term Business Loans:
- Quick Processing times. Same-Day to 24-hour funding
- All types of credit considered from Excellent to Poor credit
- Limited paperwork needed for approval
- Easier approval qualifications than that of traditional loan products
- Unlimited use of money with no limitations
Equipment Loans for Agricultural & Farm Business
At the heart of any Agricultural & Farm Business are the machines and/or equipment that is used to facilitate the execution of the business plan and activities. The cost to upgrade equipment can well exceed the available cash flow to support the purchase of necessary equipment purchases. Equipment financing is used to improve process efficiencies, quality control, lower labor cost, and improve the overall business process and structure. Equipment loans or leasing secures the equipment as collateral like you would when purchasing a truck or automobile. An equipment loan for farmers is usually structured as a lease or fixed-term loan. Loans are principle and interest and leasing is based on a fixed factor cost. Always read your agreements for specific terms and conditions when making a decision on loans for equipment.
Highlights of Equipment Financing:
- Minimal paperwork required
- Approvals same day to 24 hours
- Repayment terms from 1 to 7 years
- Affordable monthly payments
- Frees up cash flow instead of depleting company cash reserves to purchase equipment
SBA (Small Business Administration) Loans for Agricultural & Farm Business
A popular, but difficult to get approved option is an SBA loan. SBA stands for Small Business Administration and they do not lend money but set the guidelines, standards, and programs for approved lenders. SBA guarantees up to 80% of the small business loan to approved lenders who actually lend the money to businesses by way of SBA loans. Without SBA loans and their guarantee, lenders would not provide such attractive terms to businesses. With SBA backing, the rates and terms are attractive and better than any other type of business financing but keep in mind, the qualifications are tougher on credit. Be prepared for lengthy paperwork requirements and time for approvals. It will take a week to in some cases a month to get answers and any potential loan. SBA has no unique specific industry programs for agricultural or farming businesses but does serve the industry.
Highlights of SBA Loans:
- Repayment terms from 1 to 25 years
- Attractive Interest Rates as low as 4.5% principal & interest
- Monthly payments
- Access to large amounts of capital for business expansion and growth
Invoice Factoring/Financing for Agricultural & Farm Business
Invoice factoring/financing is a financial transaction type of debtor finance. This product will help agricultural & farm businesses get an advance on their uncollected invoices that they bill to clients. Invoice factoring allows the business owner to receive advances off those invoices ahead of the “net” terms of 30, 60 days and in some case, 90 days or more the invoices normally take to get paid. Basically it’s a sale of a receivable (invoice) to a third party (factoring company) who then takes the responsibility for collecting the invoice. This product is a great tool to improve cash flow. Once a client is approved, invoices can be advanced on a daily basis either through an online portal or communicated by email depending on the invoice finance company.
Highlights of Invoice Financing:
- Advance money from invoices on demand
- No credit check of business owner advancing invoices. Credit requirements based on your customer’s ability to repay not the business owner.
- Low fees, typically less than 2% of the invoice
- No monthly payments, no long term debt obligations, no account receivable to collect as invoice financing company handles all collections of advanced invoices.
Purchase Order Financing for Agricultural & Farm Business
Purchase order financing raises capital by paying suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it depending on the purchase order financer. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order funder will subtract their fees and then sends the balance of the invoice to your business.
Rates: No interest rate only a flat fee
Fees: 1% to 3% fee for each Purchase Order.
Credit Standards: All parties need favorable credit history but all credit considered
Documentation: Purchase Order samples and owner information for all parties involved in the transaction.
Processing Times: 1 to 2 weeks to set up then ability to fund Purchase Orders on-demand daily
Benefits and Best Uses of Purchase Order Financing
Used to support the entire distribution chain with capital so business owners don’t have to tap into existing cash flow. It allows business owners the ability to take on large projects or work orders without using business capital.
Business Credit Cards for Agricultural & Farm Business
Business Credit Cards, like personal credit cards, is an open revolving line of credit with a credit limit that allows for purchase and payments. Credit cards are a great solution to smaller immediate purchases and a means to pay for supplies, bills, equipment, and other small items. These are usually used in combination with other agriculture loan products as is an excellent tool in the agriculture toolbox.
Highlights of Business Credit Cards:
- Revolving principal and interest cost, only pay interest on an existing balance
- Money available on-demand 24/7 as long as you don’t exceed a credit limit
- Easy to manage and use with a plastic card that is issued to a business owner
- Minimum affordable monthly payments
Benefits of for Agricultural & Farm Business Loans
Managing cash flow can be difficult for agricultural & farm business owners. There are so many outside forces impacting the ability of the business to maintain positive cash flow. Even when planning for contingencies there sometimes is those situations that are out of control for the agriculture business. Whether it’s chasing invoices from their customers to get paid, national and/or global economic shifts in the supply and demand that impact prices, having financing is a must to survive. Having business financing in place prior to the problem can be the difference-maker to the survival of the agricultural business owner — especially when it comes to working capital.
Machines and Equipment are the foundation for efficiency within the agriculture business. Whether it’s purchasing new equipment or repairing and/or upgrading existing Equipment financing must be in the plans for agriculture business. In some cases, new equipment can entirely revolutionize the way the agriculture business processes workflow which can be all the difference in the world to improve efficiencies and find cost savings to maintain a competitive edge over competitors. Accessing equipment financing allows the business to purchase new equipment to gain new clients, operate more efficiently, and in some cases reduce labor costs and profit margins.
Employees are the lifeblood that makes the United States agriculture process work. Hired farmworkers make up less than 1 percent of all United States wage and salary workers, but they play an essential role in United States agriculture. According to data from the 2017 Census of Agriculture, wages and salaries plus contract labor costs represented 12 percent of production expenses for all farms, but as much as 43 percent on greenhouse and nursery operations, and 39 percent for fruits and tree nuts. Obtaining quality, an affordable workforce can be extremely challenging.
Types of Loan for Agriculture Business Types We Serve
- Nomadic Herding
- Rudimentary Sedentary Tillage
- Livestock Ranching
- Intensive Subsistence Farming
- Shifting Cultivation
- Commercial Plantations
- Mediterranean Agriculture
- Commercial Grain Farming
- Livestock and Grain Farming
- Subsistence Crop and Stock Farming
- Dairy Farming
- Specialized Horticulture
- Organic Farming Orchards
- Apiary Farms
- Aquaculture Farms
- Commercial Farms
- Cooperative Farms
- Dry Farms
- Family Farms
- Flower Farms
- Hay Farm
- Hobby Farm
- Micro Farm
- Poultry Farm
- Urban Farm
Frequently Asked Questions
It can be difficult to obtain financing for the agriculture business due to the inherent risk the industry has in general. The good news is that in today’s business environment there are so many new options that have given new access to capital that farms did not have in years past to help with their operation and working capital needs.
There is a variety of loan choices to help business owners with bad credit. The terms and conditions will vary and the degree of bad credit will impact the programs, costs, and terms you will be offered.
The only no-doc product available to help with business funding is credit cards. There are many business products available with limited to low documentation requirements but it will come at a cost. The less information you provide the likelihood the program costs and terms will be less favorable than traditional business financing.
Getting a start-up business loan is extremely difficult. We suggest private sources or investors for help with start-up or small business loans when it comes to the agriculture business.
Advice, Tips, Warnings about Agriculture Loan Options
The agriculture business owner must ask what is the purpose and use of financing? Conduct a cost vs benefit analysis to determine the value of getting a loan. Did you consider what challenges does the agriculture operation have in getting approved? (Credit Issues, Bank Statement cash flow issues, time in business, financial statement issues).
By considering those questions first you may be led to different loan products than what you initially think of. No two business financing options are the same and often times there is only one option, but in other cases, you may have some choices to choose from. AdvancePoint Capital can help you assist you to navigate through the search in an easy and painless way without wasting time or more importantly your money, so you don’t make costly mistakes in your business financing selection.
AdvancePoint Capital has a large marketplace with many different small business loans and funding offerings. As we always say at AdvancePoint Capital, compare, shop and you will always save!
Why AdvancePoint Capital?
- Experience – We have been funding agriculture operations for years.
- Trust – Excellent reviews from Better Business Bureau, Google business reviews and feedback from other agriculture operations
- Loan Specialists – Experiences Business funding specialists. We may not know everything about your specific business operations, but we take the time to find out and we do have a lot of experience in the agriculture industry
- No up-Front Costs, No Commitment Fee Quotes:
It’s free at AdvancePoint Capital to find out what’s available in the business funding marketplace.
- Product Diversity – A Variety of farm loans and financing roducts. We don’t just offer what we have, we offer what’s available in the entire business financing marketplace.
How to Apply for Small Business Agriculture & Farm Loans?
We at AdvancePoint Capital can help you in finding the business financing solution you need for working capital or other needs. We offer an easy experience for small businesses and farm loan options that our customers love which is a fast, streamlined process, and high approval rates that come from working with us.
Applying for a loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your money!
The fast, convenient, and straightforward way to get the money you need for your small business – now!
Get your quote today by filling out our simple form.