Saturday 26 October 2013

USDA Farm Loans For Business Funding

By Rachael Gutierrez


If you are a beginning or established farmer who needs funding to cover the cost of land, farm equipment, or other expenses, USDA farm loans may be the answer for you. These loan programs exist to fund the purchase or expansion of a farm, repairing a farm that has been damaged, or purchasing necessary equipment.

These loans are designed to cover the cost of buying land, expanding an existing operation, or repairing or replacing land, buildings, and/or equipment that have been damaged by a natural disaster such as a hurricane. Funding is specifically meant for those who are unable to obtain credit elsewhere, so if you have tried to borrow from a traditional bank with no luck, this may be an option for you. As a result, the loan is meant to be temporary, bridging the gap until such a time when the borrower can qualify for a commercial credit program.

The loan programs available vary based on your needs and available funds. If you're already working with a bank or commercial lender but are not able to qualify for a loan, you may be able to get a guaranteed loan through the agency. This program protects the funder from default. You can also get a Direct Loan through the USDA. And, if you're a farmer who wants to subdivide and sell your land, the USDA will guarantee those loans as well.

Loan options cover different expenses based on your needs and the availability of funds. An Ownership Loan funds the purchase or expansion of your business, while an Operating Loan provides funds for supplies and other daily costs of running the business. An Emergency Loan helps those who have suffered damage from a hurricane or other natural disaster. A Conservation Loan funds the establishment of an approved conservation plan. Your loan officer can help you decide the best option for you.

If you are a beginning farmer or rancher, started farming less than 10 years ago, or are a member of a group underrepresented in farming, there are funds specifically set aside each year that may help you. Underrepresented groups include women and most people who are not Caucasian.

Those eligible for this type of loan include US citizens who have not previously defaulted on a loan of this kind. Other requirements vary based on loan applied for and other circumstances; when you start the application process, you will be assigned a loan officer who will help you to establish eligibility for funding.

To get started with the business plan, articulate the mission and vision for your outfit and your plan for it to be sustainably funded in the future. You'll also need a full accounting of your finances. This is a great opportunity to outline your plan for success for the next several years of business operation.

To apply for USDA farm loans, your first step should be to visit the agency website. This location has all the information and documents that you need to get started in the process of funding your agricultural business. Within a few days of submitting your complete application, you will be contacted to discuss your request. A final loan decision will typically be made within 60 days. If your loan is not approved, there are options for you to appeal or mediate your loan request through the USDA.




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