February 1, 2021

Farm Financing | What You Should Know

It’s hard to understate the role of debt and financing in modern agriculture. While you may be looking to enter the agriculture market as an investor we think you’ll benefit from understanding how financing a farm works from a farmers perspective. You may not have to keep up with the ever changing markets or lending best practices but you will benefit from understanding the basic processes and challenges a farmer might face.

Part of being a successful farmer understanding how to structure debt as a tool for growth. This is especially true in a post-COVID world. Despite lower interest rates, the increase in demand for rural land and farm mortgage loans means it’s more important than ever to understand how the ag lending process works.  

The Current Process

Financing farm operations and agricultural land investments can be done in a few different ways. There are specific farm mortgage loans as well as plain agricultural loans that cover crops, but not buildings or dwellings. There are also specialty loans for certain types of farms. Some states might even have grants or special funds available for farms or agricultural products that are in short supply or high demand.

Farmers are required to find lenders that offer the financing solutions that they need. This involves a lot of research and effort in asking questions and making sure that lenders are willing to work with them over the life of a loan. This is all effort taken away from managing and growing the farm.

In fact, this is why Ag Lending Group exists in the first place. To work on behalf of farmers who are fed with up with traditional farmer vs. bank relationship. We’re here to handle the financing process so farmers can focus on farming.

One other available option for farm financing includes the available farm loan programs from the USDA Farm Service Agency (FSA). These loan programs provide access to a variety of lending and credit solutions for those smaller farmers and ranchers to get the funds that they need. Rates run between 1.375% and 2.5% depending on the program chosen, which are quite impressive for agricultural lending. These programs are not available everywhere or to everyone, but they are worth looking into.

The FSA programs offer everything from direct loans to land contracts, guaranteed loans, and other investing and funding options. There are even specialty loans available.

Challenges with the Current System

The lending system for agriculture, like everything, is not without its flaws. Understanding these challenges and addressing them properly can improve the future of agriculture financing for everyone. Anyone investing in agriculture, or considering it, should be familiar with what they face and how to find the best lending solutions.

How Ag Lending Group Fits In

We offer a diverse range of solutions for farm mortgages, agricultural loans, vineyard and ranch loans, and more. We also help with refinancing or bridge loans and ensure that our clients get the best terms available. We understand the family nature of farming and wants to help carry on that legacy for all of our clients.

The core purpose of Ag Lending Group is to deliver the appropriate financing solutions for our clients.

How FarmFundr Fits Into the Picture

While FarmFundr is currently accepting investors for an Almond Orchard (and soon a Pistachio Development and Row Crop Farm), we’re more excited that they’re using their platform to further educate investors about the agriculture industry as a whole.

FarmFundr is a resource that farmers and investors can use to own a piece of the pie without having to literally buy the farm.

With FarmFundr, investors and farmers can invest directly into the farm, not just into some arbitrary market listing for an agricultural stock or investment. You can look around at the available farms and determine which ones fit your investment needs. Then, you will be able to invest in each one and monitor those investments over time, conveniently from an online portal.

We can connect all investors and farmers to various loans, grants, and other financial assistance programs to ensure that everyone finds the best solution. After spending years cultivating these professional industry relationships, the least we can do is use them to help our clients find the financing and investment opportunities that they need.

Helpful Links and Resources

USDA Farm Service Agency: Farm Loan Programs

About Ag Lending Group

Farm Loans- Ag Lending Group

Frequently Asked Questions