The first step on the path to securing credit is to learn the basics about agricultural lending. Understanding how lenders review loan applications and what information they require will help you get ready.
- Farmers Guide to Agricultural Credit, Rural Advancement Foundation International
- Financing Agriculture: The Business Borrower-Lender Relationship, Northwest Farm Credit Services
- How Lending Decisions Are Made, Northwest Farm Credit Services
- Spelling out the A, B, Cs of Accessing Business Credit Webinar, USDA
- Preparing Farmers to Meet with Lenders Webinar, Southern Sustainable Agriculture Working Group
Good record keeping allows you to set and track progress toward your financial goals, enables you to make informed decisions about your business, and demonstrates your ability to generate revenue and pay off debt. Financial records, such as a balance sheet or income statement, also provide the data you need to prepare financial statements that lenders may require with the loan application.
- Establishing and Using a Farm Financial Record-Keeping System, University of Tennessee
- One-Page Financial Plan, Field Guide to the New American Foodshed
- Preparing Agricultural Financial Statements, Northwest Farm Credit Services
- Record Keeping Samples and Templates, Southern Sustainable Agriculture Working Group
A business plan is a written document outlining the goals, strategies and action plans for important areas of your farm operation, including management, finance, production and marketing. It should include enough information so that other people understand what you want to do and how you plan to do it. Business plans can also be useful when talking to a landowner about renting or buying land.
- Agriculture Business Planning Workbook, Colorado State Extension
- Building a Sustainable Business: A Guide to Developing a Business Plan for Farms and Rural Businesses, SARE
- Business Plan Workbook for New Farmers, California FarmLink
- Farm Business Planning, University of Maryland
- Financing Agriculture: Strategic Business Planning, Northwest Farm Credit
- Growing Farms: Successful Whole Farm Management Planning Book: Think It! Write it!, Oregon State University
Your credit score shows your ability to borrow money and pay it back, pay bills on time and act in a financially responsible way. A credit score is an indicator of your credit-worthiness. Before applying for a loan, know your score and be prepared to answer questions a lender might have about your credit history.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies—Equifax, Experian, and TransUnion—to provide you with a free copy of your credit report, at your request, once every 12 months.
- The Federal Trade Commission provides information about the process of getting your free credit report.
- You can obtain a free credit report through an online request form.
To get help setting up a record-keeping system, preparing financial statements and/or developing a business plan, contact your local Cooperative Extension Agent, State Department of Agriculture, local Farm Credit or commercial lending institution.
- The Cooperative Extension System is a nationwide, non-credit educational network. Each U.S. state and territory has a state office at its land-grant university and a network of local or regional offices with experts who provide useful, practical, and research-based information to agricultural producers and small business owners.
- National Association of State Department of Agriculture's Directory
- The Farm Credit Network
In 1916 Congress enacted a law to establish the Farm Credit System (FCS) to provide a reliable source of financing for farmers. FCS is a nationwide network of borrower-owned lending institutions and specialized service organizations that provide loans and other services to agricultural producers, rural homeowners, aquatic producers, timber harvesters, agri-businesses, and agricultural and rural utility cooperatives. According to the federal Farm Credit Administration—which regulates and examines FCS—FCS is the largest agricultural lender in the United States. To locate a Farm Credit institution near you, visit the Farm Credit network homepage.
State finance programs provide low interest loans, loan guarantees, and loan participation programs to help producers buy land, buildings, equipment and breeding livestock. Some programs, including "Aggie Bond" programs, are targeted specifically to beginning farmers. The National Council of State Agricultural Finance Programs tracks available programs and produces a comprehensive directory of state-level programs available to beginning and established producers.
The USDA Farm Service Agency (FSA) provides direct and guaranteed loans to farmers and ranchers unable to obtain financing from other lenders for operating expenses and land purchases. Microloans are direct farm operating loans with a shortened application process and reduced paperwork designed to meet the needs of smaller, non-traditional, and niche type operations.
To find out more about program eligibility and/or the application process, contact FSA, typically located in your local USDA service center.
- USDA Service Center Locator
- FSA Farm Loan Programs
- FSA Microloans Program
- Farm Service Agency Loans: The Ins and Outs of Growign a Farm with Federal Loans
- Your Guide to FSA Farm Loans, Farm Service Agency
- Beginning Farmers and Ranchers Loans
Your local bank may also be a potential source for credit. Many banks participate with agencies in providing financing to beginning farmers through state loan programs, including “Aggie Bond” Programs, and/or may offer loans guaranteed by FSA. Although it is uncommon, some banks have created local financing initiatives that link funds from depositors to a special lending pool available to beginning farmers. Ask your local bank if such a program is available.
The Sustainable Agriculture Research and Education (SARE) program is a regional competitive grants and education program operating in every state. The program, supported by USDA, is run by four regions—North Central, Northeast, South and West, each guided by a volunteer Administrative Council that makes grants and sets regional priorities. SARE's four regions offer an array of competitive grants for farmers and ranchers (and researchers, agricultural educators, and students) in the United States.
State Departments of Agriculture may offer grants to farmers to implement conservation practices, expand market opportunities, develop new products or provide assistance with business planning. These opportunities may be available to new and experienced farmers and typically can be found listed on State Departments of Agriculture websites under Funding Opportunities or Programs.
USDA's Rural Development Value Added Producer Grant program helps agricultural producers enter into value-added activities related to the processing and/or marketing of bio-based, value-added products. Priority may be given to a beginning farmer or rancher, a socially-disadvantaged farmer or rancher, a small or medium-sized farm or ranch structured as a family farm, a farmer or rancher cooperative. Each fiscal year, applications are requested through an announcement posted on Grants.gov.
You can find more information about preparing for credit from the websites below, as well as a wealth of information about agricultural production and marketing assistance.
- ATTRA, a sustainable agriculture assistance program managed by the National Center for Appropriate Technology
- Farm Answers, a USDA-NIFA beginning farmer and rancher clearinghouse, providing resources to help farmers get started, as well as tools to help more seasoned producers succeed.
- New Farmers, information from USDA about USDA programs for beginning farmers and ranchers
- Grants and Incentives for Northeast Agriculture, Farm Credit East
Learn about the steps and resources to help you find farmland.