Understanding The Different Types Of Agricultural Finance

It doesn’t matter if you’ve started a small homestead or have a 100+ acre farm. At some point, you’re going to need some finance to help you take your business to the next level, or even simply to stay afloat.

Types Of Agricultural Finance

It’s a good idea to understand the different types of agricultural finance today as this will help if you ever need to borrow funds.  

You should note that the application process can be complicated. You’ll find it easier to talk to a professional in farm equipment finance who will guide you through the process and help you fill out the right application forms. It’s surprisingly complex!

Input Finance

This type of finance is designed to help you purchase your livestock and to get other smaller pieces of equipment. The aim is to ensure you have enough money for the day-to-day running of the farm. This type of finance does include small tractors and the associated tools that every farmer needs to do their job. 

But, it’s not going to get you a new combine harvester.

Asset Finance

This is often referred to as the big bucks. Asset finance is designed to help you purchase a new tractor, milking machinery, or perhaps even create a new building for your chickens. In short, if you have an expensive asset that you need to continue the smooth running of your farm, or to help you expand and improve your profits, this type of finance will help you fund your purchase. 

Emerging Farmer

Newer farmers often need to negotiate with supermarkets and other large-scale businesses in order to get a contract that justifies the existence of the farm. In other words, you need some financial backing to establish the farm and get yourself in a position to secure a business contract.

Emerging farmer finance covers the basics you need to get going and become a successful farm. As this is generally aimed at start-ups it’s common for the lender to demand collateral of some description. 

Vehicle Finance

Farmers can use vehicle finance to help them purchase a new tractor. However, this is usually covered by asset finance. But, farmers do still need other vehicles, such as a truck to carry produce, pick up workers, or simply get around the farm. In this situation, reliability is essential. That’s why farmers can access vehicle finance options that will help them get the perfect vehicle for their needs. 

Thoughts On Finance

Running a farm is an expensive business. Although the perception is that farmers are rich, it can take many years for a farmer to clear all the financial commitments and actually generate some money for themselves. 

That’s why finance is such an important part of creating a farm and running one. But as with any type of finance, you need to know your sums first and be certain that you can afford to repay them. That’s why it’s best to talk to a specialist first. They’ll help to ensure you get the right finance for your needs and budget.

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