Getting An Agricultural Loan For Farm And Ranch Properties

Posted on: 5 June 2018

Have you always dreamed of owning your own farm? Your dreams don't have to be far away. There are specialized agricultural loans for farm and ranch properties, especially for those who have a history in agriculture. Here's what you need to know.

Creating a Business Plan 

Getting a farm and ranch real estate loan is halfway between purchasing a home and purchasing a business. Due to this, most lenders are going to require that you have a business plan. Your business plan should include a breakdown of your profit potential. Even a small farm has to be able to sustain itself, though "breaking even" is not necessarily a bad thing. 

If you don't already have experience in the agricultural industry, it's likely that it will be recommended. There is an exception; some programs are designed specifically for those who are new to agriculture. These often come with the requirement that the borrowers attend seminars and classes.

Finding a Lender

There are agricultural loans and USDA loans for rural farm and ranch properties. It depends on the size of the farm that you want. If you want a small subsistence farm, you may be able to acquire one with a USDA loan. These loans are intended for those who aren't making much more than average in the area and those who are buying rural properties.

If you want enough to start a small production farm (over half a million or several million), you will need to start looking into direct agricultural loans. There are both loans and grants available to those who want to start farming in the United States.

Meeting With a Business Advisor

The Small Business Administration handles inquiries for those who are starting a business in the country. Every state has their own SBA, which will give information about funding opportunities, developing business plans, and growing the business. Often, the local SBA is the first and best resource for those who want to start a farm, as they'll be able to give you step-by-step information.

Finding a Real Estate Agent

A real estate agent who specializes in farm and ranch property is generally ideal, as they will be able to show you the properties that are most likely to clear your lender and to provide the geographical features you need.

Regardless of your business plan, it's a good idea to meet with your local Small Business Administration early on. They will be able to direct you to the resources available in your area and help you formulate your next step.