Your farm loan plays a major role in the success of your land. No matter what you want to do with that money, it’s important that you choose the right loan option. Gathering all your documents, research, and plans can seem complicated, but it doesn’t have to be overwhelming. Take the first step toward making an informed decision for your farming business with this list of things to consider before seeking a farm loan.
How Does Employment Affect Your Loan?
One important thing to ask yourself when researching loan options is how your income affects your loan. Start with a simple question: will you keep your current job, or will you leave it to focus on your farm?
If you want to stay in your current job, you’ll need to review your W2s and tax returns from the past couple of years. This information will help you determine your debt-to-income ratio—the portion of your paycheck that goes toward debts—and influence your borrowing risk.
If you choose to quit your current job, it’s a good idea to gather any proof of experience you have in the agricultural field. How will your work history help you find success on your farm? This information can help you build a business plan and influence your chances of qualifying for a loan.
How Does Your Credit Score Impact Your Loan?
Your credit score is one of the most important things to consider before seeking a farm loan. As with any loan, a good credit score helps you secure lower interest rates and experience an overall easier approval process. But that doesn’t mean a lower score will automatically prevent you from getting a loan.
If you have a lower credit score, be prepared to supplement it with proof of farming experience, a co-signer with better credit, a well-thought-out business plan, or high-value assets. These factors can help prove to lenders that your credit score won’t hinder your chances of success and ability to repay the loan.
Should You Review All Your Options?
There is no one-size-fits-all approach to farm loans. Your employment, credit history, location, and what you want to do with your land all influence what you can qualify for. That’s why it’s important to look carefully at all your options before you apply. Once you know what’s available to you, you can make a smart decision about which loan is right for you. Don’t hesitate to reach out to lenders to ask questions and get their expert insight about different options.
At Farm Plus Financial, we want to help you find success with your farming endeavor. That’s why our farm loan programs include numerous options for farmers, ranchers, hobby farmers, winemakers, and more. Learn about how we can help you secure the financing you need for your land when you visit us online today.