Running a farm is one of the most challenging jobs there is, and to do it well you need the right equipment and storage. Metal buildings are excellent investments because they last for decades and provide a fire-resistant, rust-resistant, varmint-resistant place to store machinery, feed and livestock among other things.
Obtaining a loan to purchase your metal building is possible through a farm credit program. Farm credit lenders understand the cyclical nature of farming and often specialize in lending for a particular type of farming.
Many lenders structure repayments monthly but will accept annual payments if the farmer’s income is generated by a specific event such as harvest.
Types of Agricultural Loans
A farmer or rancher can apply for the same types of loans available to any other business person. There are lines of credit, credit unions, co-ops and payment plans through vendors and sellers.
The loan may be short-term, intermediate-term or long-term depending on the amount borrowed, the asset being purchased and the creditworthiness of the borrower. Lenders often label loans with other names like a description of the purpose of the loan or the loan terms. Loan maturity may follow agricultural production cycles of three to eighteen months.
Depreciable assets are often funded by intermediate loans and act as their own collateral. Assets include machinery, equipment, breeding stock or improvements. Long-term loans are typically for buying land, construction and development. Typically amortized over ten years or more, it may be called a real estate mortgage or contract financing.
Where Can You Get a Farm Loan?
Programs are available through the Farm Service Agency, FSA, the first place a beginning farmer should go for advice and financial assistance.
The availability of farm loans depends on the amount of money granted by Congress every year and whether or not you are considered a beginner.
Process of Loan Application
First, let’s look at some of the terminology you are likely to hear.
- Promissory note - the document that says the borrower agrees to repay a loan at a stipulated interest rate within a specified period of time
- Loan agreement - the written agreement between the borrower and lender stipulation terms and conditions in association with a financing transaction.
- Security agreement - a legal document signed by the borrower granting a security interest to the lender in specified personal property pledged as collateral.
- Financing statement - the document filed by the lender with public officials reporting the security interest or lien on a borrower’s non-real estate assets.
- Maturity - the time until the loan is fully due and payable.
- Collateral - a mortgage or deed of trust, security agreement or other asset held against the repayment of the loan.
The lender then performs a credit evaluation procedure to determine your creditworthiness. Creditors analyze agricultural borrowers using a combination of judgment and formal credit scoring models or risk assessments.
- They look at business performance such as profitability, solvency, liquidity, collateral and repayment history.
- They use your credit score for making the loan decision, determining your interest rate and the need for loan supervision and business performance monitoring.
When seeking a loan, shop around for the best interest rates and repayment plans. If you need additional assistance the USDA Farm Service Agency also offers direct loans or loan guarantees of up to 95% to help bridge the gap for commercial credit if you are not eligible on your own.
Farmers, ranchers and others who operate agricultural businesses are all eligible for farm credit. Credit can be obtained to buy and develop land, purchase breed stock or seed stock or for purchasing a steel agricultural building.
A steel building can be purchased in any size, from a small shed to an airplane hangar or garage for farm machinery. Metal buildings are made for tough environments and are built to last with minimal maintenance. Not only is the price to purchase reasonable, but the total cost of ownership is also incredibly low when compared to other types of structures and assets.
Farmers and ranchers work hard to provide this country with food and other materials. They are reliant on the variable weather patterns and the markets to make a living. Providing loans for cost-effective assets that will last as long as the farm makes it possible for farmers to succeed.