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Unit 3: Managing the Farm/Ranch Business for Long-Term Success

Where to Go for Credit

Once producers have their business plan in order and are ready to seek financing, where can they go? Click on each credit source tab to learn more.
  • Commercial Banks

    • Commercial Banks: Many commercial banks have an agricultural lending department and offer a wide range of financial services, including short-, intermediate-, and long-term loans. If commercial loans are not available, farmers and ranchers might be able to secure financing from alternative or informal lending sources such as government agencies, community development organizations, micro-lending institutions and even individual investors.

  • Certified Development Company (CDC)

    • Certified Development Company (CDC): The Certified Development Company is a non-profit corporation that contributes to the economic development of a community or region through the extension of long-term, fixed-rate financing for the purchase of major fixed assets such as land, buildings and machinery or for the modernizing, renovating and conversion of existing facilities. There are hundreds of CDCs nationwide that manage the 504 CDC Loan Program in collaboration with the Small Business Administration. To learn more, visit: Small Business Administration: Certified Development Company.

  • Farm Credit

    • Farm Credit: Farm Credit is a nationwide system of cooperatively owned lending institutions that has made credit and lease-financing available since 1916. Most lenders have a farm background and are trained to understand the needs of “full-time and two-career farmers.” Services include long-, intermediate- and short-term loans, revolving credit lines and lease financing. Some institutions also offer farm business consulting, tax and recordkeeping assistance and estate planning. More information at Farm Credit Network.

  • USDA Farm Service Agency (FSA)

    • USDA Farm Service Agency (FSA): The Farm Service Agency makes and guarantees farm loans (usually at two points under local bank interest rates) for capital improvements and operating expenses. FSA also provides technical assistance to eligible applicants. Only those applicants who can show that they have been denied financing from at least three other institutions are eligible. FSA requires most of the same financial documents as commercial lenders: a business plan and three years worth of records. More information at USDA Farm Service Agency: Farm Loan Programs.

  • Small Business Administration (SBA)

    • Small Business Administration (SBA): The Small Business Administration offers several loan guarantee programs for small businesses, some of which are aimed at agricultural enterprises. SBA loans typically require less documentation and guarantee up to 90 % of the loan value for purchases of working capital and fixed assets. To learn more, visit Small Business Administration Loan Programs.

  • USDA Rural Development

USDA Rural Development: USDA Rural Development works in partnership with private-sector and community-based organizations to help fund businesses that create or preserve jobs and/or promote a clean rural environment. USDA’s financial resources are often leveraged with those of other lenders to meet business and credit needs in under-served areas. More information at USDA Rural Development Programs and Services.

Note that these are national financing sources. Many states offer fixed interest-rate or low-interest loan programs. Check with your local SBA office or state department of agriculture to learn more. Also note that most farmers, especially those in the start-up phase, use multiple sources of financing.
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