Here in Northeast Iowa, we know agriculture is the foundation of who we are. We also understand that loans for your ag business can be confusing and hard to know which is the right one for you. So we want to share the different options available and explain them, so you can keep working hard in the fields and not at trying to comprehend the different loan options available.
Beginning Farmer Loans
Most farmers that are just starting out don’t lack experience, but rather a means of gathering enough capital for a down payment. The Farm Service Agency helps greatly with this as they have several loan programs new farmers qualify for to help buy the first farm or ranch.
Operating Lines of Credit or Loans
For most farmers, this is crucial to your business since you don’t get paid until the fall after harvest. Operating lines of credit are pre-approved amounts that can be used for production, operating expenses and feed or livestock purchases. Some banks only issue interest on funds used on the operating line and not the entire amount of the loan. This is the most important type of loan to have as a farmer since you need cash on hand throughout the year to make purchases of seed, feed, and other miscellaneous necessities.
Real Estate Financing
This type of financing has some flexibility as far as what it can be used for, whether that be for purchasing or refinancing real estate or construction of new facilities. They typically have short and long-term fixed-rate options available.
Personal Property Loans
These are similar to an operating line of credit but is used for buying machinery, livestock, and minor real estate improvements.
Now that you know the most common types of ag loans you might be ready for yours (which we would be happy to do!), but if you are still unsure which is right for you, don’t be afraid to contact us with any questions.