A Small Guide to Agriculture Business Loans
The agriculture industry is expansive, ranging from the growth of food to the distribution of it. Any business within that chain may need financial assistance as the demand for food increases, whether it be for starting new companies within the industry or expanding existing ones. Luckily, there are loans specific to the agriculture industry that can help get businesses the financing they need.
What Industries Can Benefit from Financing?
Virtually any agricultural business can benefit from financing. This ranges from farming and livestock to auxiliary industries like international trade, environmental compliance, and veterinary care. Some industries, such as the organic food industry, can benefit from financing terms specifically catered towards companies that are going green.
What Can the Loans Be Used For?
Companies that conduct the actual farming and processing of grown goods need the right equipment to run efficiently. Often, the right loan can help businesses secure expensive but top-of-the-line equipment by offering them affordable repayment terms. Acquiring revolutionizing equipment is often necessary to stay ahead of competitors and give a business a bit of an edge.
Financing can also be used for day-to-day operations, such as increasing working capital or marketing their business. It can even be used for expansions that involve procuring more land or increasing the number of staff. A loan could cover payroll and the on-boarding process, helping a business stay on track.
What Types of Loans Are There?
Bank loans are the most common way agricultural businesses can get a loan because they’re reliable and have a variety of applications: purchasing land, upgrading machinery, boosting working capital, and refinancing. SBA loans are also quite popular because of their loan sizes, but they do have more stringent eligibility requirements. If you have exceptional credit and a robust business plan, an SBA loan could be right for you.
Alternative financing comes in the form of third-party lenders or cash advances. Third-party lenders offer more affordable terms, have less strict credit requirements, and often approve loans much faster than banks. If you need funding quickly, an alternative business loan might be the best option. Additionally, agriculture cash advances allow you to gain access to a percentage of future revenue by selling your invoices to a cash lender. You don’t need good credit to reap the benefits of a cash advance. This option works well for businesses that have customers that don’t immediately settle their invoices and make it difficult for businesses to budget the cash flow monthly.