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Why Established Farmers Should Leverage Loans for Expansion

Farmland is a major investment—one that can either cost your business greatly or take you to new levels of success. Purchasing farmland outright isn’t always easy, but that’s where farm loans come in. Strategic farm financing allows established businesses to grow their operations without spreading their resources too thin. Read on to learn more about why established farmers should leverage loans for expansion and see how the right farm financing can help you grow your agricultural business.

Farmland Values Are Increasing

Farmland has historically grown in value year over year. But with an average value increase of $1,300 an acre between 2021 and 2023, farmers have seen a particularly sharp uptick in the value of their land throughout the years since the pandemic. This means record-high income for a lot of agricultural businesses, but it also makes it difficult to invest in new land.

Leveraging loans lets you overcome that barrier and expand your property without pouring your entire budget into land purchases. This helps your established business overcome property limitations, reap the value of new land, and grow operations over time.

Farm Loans Can Generate Wealth

One of the best reasons for established farmers to leverage loans for expansion is the chance to increase revenue streams. No matter how successful your current operation is, there are always more opportunities to generate profits with farmland.

In addition to farming or ranching operations, farmland owners can generate wealth through increasing land values, land renting and crop share, and agritourism opportunities, such as farm tours, festivals, and other events. Farmers can also leverage loans to invest in equipment and infrastructure changes to promote conservation or sustainability initiatives, which in turn can lead to government subsidies and tax breaks.

Preservation of a Limited Resource

The consistent expansion of urban areas creates a steady decline of farmable land in the United States. Though this decrease is slow, it is steady. That increasing scarcity is part of why farmland has historically increased in value year over year.

At the same time, the average age of farmers is rising steadily, which means that there is plenty of existing farmland that will likely change hands in the next 10 to 20 years. Being able to purchase this newly available land gives you access to property that has already proven successful for agriculture. This keeps farm properties in the hands of experienced farmers like you who can utilize it to reach greater heights with your own operations.

Help your business achieve more when you partner with a trusted agricultural lending company like Farm Plus Financial. See how our competitive loan options can fund growth and opportunity for your farm when you visit us today.