When you’re looking for a farm loan, finding the right vendor is only part of the journey. You also want to make the process as smooth and efficient as possible so you can secure credit and work on what matters most—your business. While you can’t always predict what bumps you’ll run into along the way, preparing yourself with all the information and records you need to get approval will improve your chances and make the experience easier for everyone involved. Find farm loan success with these crucial tips for securing lenders for your agriculture financing.
Don’t Apply Without a Business Plan
A detailed business plan can be the difference between approval and rejection, so it’s important to draft yours before you even start looking for lenders. Include information such as your mission statement, goals, and values. It’s also important to include financial details like your sales goals, predicted operating costs, and expected revenue. The plan should discuss any assets you already have, such as property, equipment, or livestock.
Furthermore, detail any previous farming experience you have. Or, if you don’t have previous farming experience, explain other job experience or qualifications that are relevant to the work you will be doing for your agriculture business. Remember, the more serious, detailed, and realistic your business plan is, the more credible you will seem to lenders and the more likely you are to get approval.
Pay Attention to Your Credit
As with any loan, credit score plays a big role in securing an agricultural loan. The better your credit score is, the easier it will be to secure a loan with lower interest rates. One of the most important tips for securing lenders is to know your credit score beforehand so you have an idea of what to expect. This will also help you gather the resources you need to secure a loan if you have a lower credit score, such as proof of previous farming experience, high-value assets, or a co-signer with good credit.
Factor Capacity Into Expected Revenue
Your capacity refers to your ability to repay your loan reliably on a regular basis. When a lender reviews your application, they will pay close attention to whether your monthly revenue allows for consistent loan payments. As you draft your business plan and other financial goals, make sure you factor expected annual payments and terms into your expenses. This will ensure you can afford your farm financing. It also tells potential lenders that you are prepared to stay on top of your loan payments.
Be Ready for Questions
Gathering your documentation is important, but you should also be prepared to discuss all the information your lender is reviewing. Being able to confidently answer questions about your current financial situation, assets and collateral, repayment plans, business goals, and more will make the application process much smoother. Clear, knowledgeable, and honest communication will also allow you to work through any potential issues with your lender. This will help you secure the financing you need, even if you run into questions or issues during the application process.
Our expert team is here to help you every step of the way so that you can get the credit you need to make a difference in your business. Whether you’re starting new or expanding your current operation, you can find a farm loan to suit your needs at Farm Plus Financial.