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A farm loan is a type of specialty loan intended to be used to purchase a farm or expand your existing farm. It can also help with operating expenses and ownership costs. You may use a farm loan to buy additional acreage, purchase more livestock, or replace farm machinery.
Farm loans vary in terms of the amount, costs, loan length, borrower qualifications, and what the money can be used for. There are real estate-based loans, short- and long-term loans, operating loans, lines of credit, and government-backed loans. Keep reading to find out more about farm loans and which one is right for you.
Best Overall: AG America Lending
Why We Chose It: The company offers nationwide custom loans for a variety of sectors in the farming industry and provides helpful farming resources.
Loans available in all states
Custom loans by crops and commodities
Organized and informational website
Minimum credit score of 680 is usually required
Small farms of less than 25 acres don’t normally qualify for a loan
AG America Lending is an agricultural land lender that helps farmers and ranchers realize their dreams and see their plans come to fruition. The company is based in central Florida but offers loans nationwide. There are a variety of loan products, including lines of credit, refinaces, and land purchase loans. You can use the company's loans to buy land and expand your operations, increase your working capital, or refinance debt and reduce payments. Terms, rates, and qualifications vary because there are so many loan programs. Keep in mind that you typically need at least a 680 credit score to qualify.
You can get verified on AG America Lending's website by answering a few questions and then you will be contacted by a loan specialist. You can email or call the company for assistance as well. AG has a newsletter and a plethora of agricultural resources like a blog, testimonials, videos, and a helpful agricultural lending glossary. The company is an expert in land and commodities and prides itself on helping its customers not only with their loans but with their farm operations overall.
Best Farm Loan Marketplace: Farm Service Agency
Why We Chose It: This is a loan marketplace for farmers and ranchers with a multitude of nationwide government-backed farm loans, industry news, and resources.
One website for multiple loans
Loans for beginning farmers and loans for emergencies
Upfront interest rates
Different loans and lenders will affect the loan requirements
So much information on the website that it may feel overwhelming
The Farm Service Agency (FSA) is part of the U.S Department of Agriculture and is designed to offer loans to help ranchers and farmers get the financing they need to start, expand, or maintain a family farm. Rates typically range from 1.375 percent to 2.375 percent, as of February 2021, and loans are offered nationwide. Guaranteed and direct loans are available. Guaranteed loans are made by a USDA-approved lender and backed by the FSA, while direct loans are funded directly from the FSA to the farmer.
The FSA offers a variety of loans, including some for minorities and youths, microloans, emergency relief loans, farm ownership loans, and operational loans.
The FSA website provides relevant industry news, up-to-date interest rates, and a discovery tool to find the loan that is right for you. You can view your loan information online or talk to a loan specialist over the phone or at an office in some locations.
Best Short-Term Loan: Farm Credit Mid-America
Why We Chose It: The company offers short-term loans with quick funding times and flexible repayment schedules.
Farm loan calculator to show you exactly how much you will pay back and when
Short- and long-term loans with competitive rates and flexible repayment terms
Loans for any stage of your farming business
Not all loans are nationwide
Must meet FSA lending qualifications in addition to lender qualifications
Founded in 1916, Farm Credit Mid-America is a financial institution that is dedicated to serving the needs of middle America’s farmers and rural residents. It employs over 1,100 people and serves more than 100,000 customers. The company has headquarters in Louisville, Kentucky, and serves Kentucky, Ohio, Tennessee, and Indiana. However, it is part of the Farm Credit System, a network that provides nationwide loans.
The company is a cooperative, meaning it's owned by its members. Farmers serve on its board of directors. The institution focuses on lending to rural communities and investing in them with $2 million every year for youth programs and education in agriculture initiatives.
Short-term loans under $75,000, loans over $75,000, revolving lines of credit, rural home loans, rural construction loans, commercial agriculture loans, food and agribusiness loans, and crop insurance are available. Customers can apply for short-term loans online. They have flexible repayment terms, competitive rates, and quick and convenient disbursement. Loans can be used for buildings, farm equipment, farm vehicles, grain bins, breeding livestock, and other farm-related things.
Best for Real Estate-Based Loans: Farm Plus Financial
Why We Chose It: The company offers a variety of loan products but specializes in real estate-based loans. It also has an online application and competitive rates.
Loans for part- and full-time farmers
Competitive interest rates
Many loans to choose from, including lines of credit and loan conversions
Minimum credit score of 680 is usually required to get a loan
Minimum loan amount is typically $400,000
Farm Plus Financial was founded in 2007 and specializes in agricultural real estate-based loans for farmers. These loans can be used for a variety of purposes, including debt consolidation, expansion, acquiring new property, or refinancing an existing loan. You can apply online or over the phone with a loan specialist, and loans can close in a few weeks. Loan amounts typically range from $400,000 to $25 million.
Loan products include lines of credit, variable and fixed-rate loans with terms of up to 30 years, timber loans, winery and vineyard loans, seasonal loans, split loans, and conversion loan options without prepayment penalties.
Farm Plus Financial lends in all states except for North Dakota. Rates start as low as 2 percent, as of February 2021, and a credit score of 680 or higher is generally needed to qualify. An average down payment of 30 percent is required, making these loans harder to get if you don’t have money saved.
In addition to farm loans, the website has a payment calculator, application checklist, customer testimonials, explanation of loan types, and other helpful resources.
All of the farm loans that made our list have different options, loan types, terms, and qualifications. They’re all reputable companies that cater to farmers, but we recommend checking out AG America Lending first. The company is an expert in the industry and offers several loan products for farms and ranches nationwide.
Frequently Asked Questions
What Is a Farm Loan?
A farm loan is a type of financing product tailored specifically to the farming and ranching industries, which have specific needs that traditional loans may not be able to meet. Farm loans differ in length, uses, qualifications, and loan types. However, interest rates are typically low and the U.S. government backs some loans in an effort to increase loan availability and protect lenders from possible defaults.
Farm loans can generally be used to purchase land, including land with structures on it, purchase farm equipment, pay operating expenses, provide working capital, and many other uses. Farm loans may come in the form of long-term real estate-backed loans, short-term loans for immediate uses, lines of credit, and operational expense loans.
Who Needs a Farm Loan?
Any farmer or rancher who qualifies would benefit from a farm loan. Qualifications vary based on the type of loan, lender, and amount financed. Typically, a farmer who wants to acquire a new farm would be able to get a farm loan, as would a farmer who wants to expand their farm and buy more acreage and livestock. Additionally, a rancher who wants to fix or replace broken equipment or purchase feed and tools would also benefit from a farm loan.
How Long Is a Farm Loan Term?
As is the case with most types of loans, farm loan terms vary in length. They typically range from 10 to 40 years, but some short-term loans may be as short as a couple of years with flexible repayment terms. Farm loans that are real estate-backed generally tend to be more similar to mortgage loan lengths and can be up to 40 years.
How We Chose the Best Farm Loans
We reviewed eight different farm loans before choosing the ones for our roundup. The best farm loans are offered by reputable companies and/or government institutions. We chose industry leaders with expert knowledge in the farming and ranching industries and considered types of loans offered, industries catered to, geographic areas served, loan terms, and qualifications.