3. Definition
Agricultural Loans are made to
farmers to finance farming activities.
Agricultural loans make up about 1% of
all bank loans but are an important form
of lending for small rural banks. Smaller
banks used about 6% of their assets to
make agricultural loans. Short-term
agricultural loans are usually seasonal
and are used to finance the purchase of
seeds, fertilizer and livestock. These
types of loans usually require a lending
officer to inspect the borrowers farm
once a year.
4. Types of Agriculture loan
Agriculture loans are commonly supplied by the Farm Service
Agency (FSA) of the United States Department of Agriculture (USDA).
You may be able to find state or local loans as well, but the federal
programs are often the most well-funded and easy to secure. Consider
these programs if you are looking for an agriculture loan.
Farm Storage Facilities Loans
Farm Storage Facility Loans (FSFL) can help you afford the cost to
build an on-farm storage facility for your crop and products. To qualify,
the commodities you are storing must fall into the categories of: corn,
oats, wheat, barley, rice, soybeans, peanuts, oilseeds, lentils, peas,
5. hay, biomass, fruits, vegetables or grain. If you qualify, you can obtain
up to $500,000 in direct financing from the federal government.
Farm Operating Loans
Operating loans assist farmers in day-to-day needs or expansion
requirements. They come in both direct and indirect options. An
indirect loan is provided by a private lender but may be guaranteed by
the FSA. This makes the loan more affordable. A guaranteed, indirect
loan may be issued in an amount as large as $1,112,000, with a
guarantee up to 95 percent. Direct loans may also be issued to credit
worthy individuals who do not qualify for private loans due to other
circumstances. These loans may be as large as $300,000.
Farm Ownership Loans
Like operating loans, ownership loans provided by the FSA come in
both guaranteed and direct loan form. The limits are the same as
those limits provided by the operating loan program. This money must
go directly toward the purchase of land, livestock, crops or machinery
needed to assist in acquiring ownership of a farm meant for
commercial production. In addition to credit requirements, the farm
owner must have experience in the farming industry to promise
successful operation of the new business.
Fisheries Finance Program
This program is designed for specific projects in fisheries that qualify
under the direction of Congress. A qualified program is eligible for up
to 80 percent financing through a direct loan program. This loan
program is designed to refinance a private debt on a fishing vessel or
to provide for maintenance and repairs on an existing vessel. Qualified
projects do not include complete construction of a new fishing vessel
or fishery, however. In order to qualify, the fishery must meet
environmental and government regulations. The business owner must
also be free of delinquent federal debt and be in good financial
standing. This program is not designed to refinance a loan in
delinquency or default.
6. Farm Labor Housing
This program provides loans and grants through the US Department of
Housing and Rural Development's Rural Housing initiative. The
program provides capital to build or replace housing structures for
rural farm workers. The program is meant to make the housing
facilities more livable, and it may include the replacement or repair of
furnishings inside the housing structure. Further, this loan or grant can
extend to a wide range of farming projects including rare projects like
oyster farming or fisheries.
The Advantages of Agriculture Loans
1. USDA
o The United States Department of Agriculture sponsors most of the
farm loans made in America. These loans are not always direct loans from
7. the federal government. Instead the government approves certain lenders
to make farm loans using government-approved standards and
regulations. A list of approved lenders can be found on the USDA
webpage (see resources).
Direct Loans
o The USDA makes operating loans and farm ownership loans on a
direct basis. These loans are used to make land purchases, operating
equipment purchases, as well as livestock, machinery, and tool
purchases. The advantage of these loans is that new ranchers can finance
expansion on their farms. Similarly, struggling farmers can apply for an OL
(operating loan) to subsidize low revenues due to a poor farming season.
Emergency Loans
o Ranchers and farmers are often the victims of natural disasters.
These USDA emergency loans help disaster victims renovate and rebuild
property lost, or replace damaged machinery. In order to qualify for an
emergency loan, farmers must live in an area designated as a Federal
Disaster Zone by the President or the Secretary of Agriculture. These
loans have often helped farmers rebuild and recover instead of losing their
businesses entirely.
SDA Loans
o Socially disadvantaged loans (SDA) are made to ranchers and
farmers who've historically faced discrimination or prejudice due to
ethnicity, gender, race, sexual orientation, or national origin. Such loans
are made to African-Americans, Asian-Americans, Pacific Islanders,
women, American Indians, Native Alaskans, and Hispanics. These loans
are intended to offer advantages to marginalized individuals and
communities.
First-time Farm Owners
o The FSA and USDA also offer funding to first-time ranchers and
farmers. In order to qualify for these loans, borrowers must not have
owned an operating farm in the last 10 years. Also, these loans are made
8. to borrowers who show evidence of solid creditworthiness. These loans
are intended to foster the creation of new farms in the United States.
Sometimes considered an antiquated business, farmers and ranchers
contribute hugely to the U.S. economy, and the federal government's loan
programs are intended to aid and foster these individual business owners.
• Dena bank loan scams
• Dena Kisan Gold Credit Card Scheme
• Dena Kisan Credit Card Scheme
• Financing Agriclinic/Agribusiness Centres
• Scheme for Financing construction/ renovation/
expansion of Cold Storage
• Scheme for Financing Rural Godown
• Dena Bhumiheen Kisan Credit Card Scheme
• Scheme for financing Tenant Farmers / oral Lessees
• Scheme for extending credit to purchase of Land by
small and marginal farmers
• Financing Horticulture Crops
• Dena General Credit Card Scheme
• Loan for development of waste land
