Farm loans for women

Financing for women farmers can come as a loan or as a grant. Loans are provided by government agencies, nonprofits and commercial lenders, while grants are typically only available from government sources and nonprofits. Depending on your need for financing and your business situation, it may be easier and faster to secure a farm loan than a grant, although the biggest benefit of a grant is that as long as you spend it where you said you would, you never have to pay the money back.

Main types of farm loan: 

Business term loans 

The most common type of business loan. Typically used for one-off investments where you know exactly how much cash you need. Land and property purchases, agricultural plant and equipment investment, and debt repayment and restructuring activities work well with this kind of loan. You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Collateral may be required.

Business line of credit 

This is a business loan that functions like a high-value credit card but comes with lower interest rates and fees. Farmers can withdraw as much as they want when they want from a loan facility up to the limit of their borrowing. Ideal for covering gaps in working capital, or sudden costs or opportunities, a line of credit can give you excellent peace of mind – you have access to funds when you need them, but you only pay interest on the sums that you withdraw. Interest rates are usually fixed, and your farming business may repay on a set or flexible schedule. Collateral may be required.

Invoice financing 

Also known as account receivables financing, this type of loan works best for farms that have regular sales of produce – such as dairy products – rather than uneven, seasonal income. Invoice financing allows farmers to borrow against the value of their unpaid invoices. The lender may provide up to 95% of the invoice value within a few days or even hours of the bill being raised. Your invoices act as collateral, no added security is required.

Equipment financing 

Equipment loans are an ideal way to buy expensive agricultural machinery and equipment. Spread the cost over time to take the strain off cashflow. Equipment loans use the assets you’re financing as security, similar to a car loan or a residential mortgage, meaning there is no need for added collateral. Use the equipment as you pay for it while the lender maintains a lien on the machinery. Once you pay the loan back, the lender releases the lien, and you own the equipment outright.