Farm Finance, Loans, Schemes and Tariffs

Types of farm loans

A farming loan is matched to what the money pays for and how long that thing lasts. Short-term operating loans or lines of credit cover a season’s seed, fertilizer, fuel, feed and labor, and are repaid when the crop or livestock is sold. Intermediate loans, usually a few years long, pay for machinery, breeding stock, irrigation equipment or buildings. Long-term real estate loans, often 20 years or more, are used to buy land or refinance it. Matching the term to the asset matters: paying for a combine out of an operating line squeezes cash flow for years.

This page is general information, not financial advice, and it doesn’t quote interest rates because they change often. Our guide to farm loan interest rates lists recent USDA and bank rates with the date they applied from, and you should always confirm current terms with the lender.

Who lends to farmers

In the United States, three groups do most farm lending.

Commercial banks

Local and regional banks make many operating and equipment loans, especially to farms they already know. Rates and terms depend on the bank, your credit history and the collateral.

The Farm Credit System

A nationwide network of borrower-owned cooperative lenders created by Congress to serve agriculture and rural areas. Because borrowers own the associations, some return part of their earnings to members as patronage payments.

USDA Farm Service Agency

The Farm Service Agency (FSA) makes direct loans and guarantees loans made by other lenders. It focuses on family farmers who can’t get enough credit elsewhere on reasonable terms, with funds set aside for beginning farmers, and it offers microloans for small and starting operations. FSA posts its current rates on its website each month.

Equipment dealers and input suppliers also offer financing, which can be convenient but is worth comparing with a lender’s offer. Our overview of USDA grants and loans for farmers covers the federal programs one by one, and the guide to an agri land purchase loan explains how land loans are secured and repaid.

What a lender looks at

Agricultural lenders tend to ask for the same package: a balance sheet, income statements or tax returns for the last few years, a cash flow projection for the coming year, production records, and details of land, leases and insurance. Behind that, they’re judging whether the farm can repay from its own income, how much equity it has, what the collateral is worth, and how well it has handled bad years before.

If you’re preparing an application, a few things make it easier: financial statements prepared the same way each year, a budget with yields you can back up from records, a short explanation of any bad year and what changed afterward, and quotes for anything you plan to buy. First-time borrowers without much history can strengthen a request with a written farm plan, evidence of training or experience, and a smaller first loan that builds a repayment record.

Crop records carry a lot of weight because yield is the biggest swing factor in farm income. Some lenders and insurers now check field history from satellite data rather than relying only on what the borrower reports. Our crop loan and insurance tools are designed for that work: yield prediction per farm or region, farm-level risk profiles from crop history, weather and field condition, and checks on land and claim data.

Grants and farm support programs

Grants don’t have to be repaid, but they’re competitive, usually tied to a specific purpose, and often require you to cover part of the cost yourself. In the US, common purposes include conservation practices, on-farm energy efficiency and renewable energy, adding value to farm products, and support for beginning farmers. State programs add more, such as the New York small farm grants for equipment and storage.

Federal farm support goes well beyond grants. It includes commodity programs that pay out when prices or revenue fall below set levels, subsidized crop insurance premiums, conservation payments and disaster assistance. Rules change with each farm bill and sometimes in between, so check the USDA program page before you plan around any payment. Our piece on US farm subsidies describes the main programs and how they’ve been shifting.

How tariffs reach the farm

Tariffs affect farms from two directions. When the US raises tariffs, trading partners often answer with tariffs on American farm exports, and crops that depend heavily on foreign buyers, such as soybeans, tree nuts, pork and dairy, lose sales or have to be sold at a discount. On the cost side, tariffs on imported steel, machinery parts or fertilizer raise what farmers pay for inputs. Over time, buyers who switched to other suppliers don’t always come back. Our articles on farm products most affected by tariffs and on Canada’s tariffs on US agricultural products follow specific cases.