Ag Alternatives : Financing Options

Financing Options

By Sandy Buxton, Washington County Extension Educator

Financing a new small or part-time business is a significant challenge. Very few ordinary ag lenders will be happy to be the first place for you to stop unless you are purchasing rural property with off-farm income.

Most small or part-time enterprises start by taking out a personal loan or using home-equity loan money which you can get in order to buy a boat or take a vacation. Banks are rather funny about loaning money for agricultural purposes. Other sources of financing include borrowing from family members or credit cards.

Make sure that you investigate ALL of the options that are available to you and have a good business plan so you are ready in case a lender is friendly to your project. You would not want to miss an opportunity while you put something together if someone is interested.

Something to understand is that lenders are friendlier to loaning money for tangible things (animals, equipment, real estate) rather than operating expenses where money disappears but may result in very little. Even so, animals are tricky because they can get sick, die from poor care or have little value in a market downturn, so they are not the best things to loan on. Equipment is the most preferred arena; portable, reasonable expense and fairly liquid.

Ask around about who the local ag lenders are in your area. When you start or once you have a little experience and can prove how you are carrying out your plan, then you are in a good position to approach some institution with a request.

USDA Farm Service Agency has a Credit Team. See http://www.fsa.usda.gov/dafl/default.htm

First Pioneer Farm Credit covers eastern NY and much of New England. See http://www.farmcredit.com

NBT Bank in Canojoharie, NY is another option. See http://www.nbtbank.com

Farm Bureau Bank is a national on-line bank headquartered in the midwest available to Farm Bureau members. See http://www.farmbureaubank.com