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:

SBA loans

Although they are not only for female farmers, SBA loans can be obtained from banks, credit unions, nonprofits and online lenders who are part of the Small Business Administration (SBA) lender network. Partially backed by the US Government, SBA loans usually come with much lower interest rates and fees than other commercial lending. Although there are many types of SBA loan, SBA 7a, SBA express and SBA microloans may suit the needs of women farmers best:

SBA 7a loans

This is the most common type of SBA loan, providing up to $5million to qualifying borrowers with repayment terms as long as 25 years. These loans are 85% backed by the US government, which reduces risk for lenders, but meeting the strict rules of eligibility could still be tough for some farm businesses. As well as an approval process that can take several months, farm organizations will typically need to have been in business for at least four years and have annual revenues over $180,000. Your personal credit score must be at least 680.

SBA express loans

SBA express loans are a faster alternative to the standard 7a loan program. Offered by the same pool of lenders, express loans can give women farmers up to $500,000 to support their business and you will usually get a ‘yes/no’ indication within 36 hours of making your application. SBA express loans are only 50% backed by the US Government, so lenders carry more risk. This means interest rates and fees are higher with express loans than their 7a counterparts.   

SBA microloans

Nonprofit and community-based lenders can provide SBA microloans for female farmers that may struggle to secure other business financing. Available up to $50,000, these loans can be ideal for farmers who are seeking a smaller sum to start or grow their business. SBA microloans also come with more relaxed qualifying rules and can usually be secured with FICO scores as low as 500, or even with no credit score at all. However, women farmers should be aware that these types of loan often require collateral to secure the debt or a personal guarantee that makes you personally responsible for the loan, not your business. 

FSA loans

The Farm Service Agency (FSA) provides financing for farmers, ranchers and other types of agricultural business. Loans may come directly from the FSA or via their network of commercial and nonprofit lenders. FSA loans can be used to pay for almost any farming need, providing up to $949,000 in funding with repayment terms as long as 40 years. 

The FSA provides three types of loan program – Direct Operating loans, Direct Farm Ownership loans and Farming Microloans. Of these three, only the Direct Farm Ownership loan is designed specifically for historically underserved, women farmers and beginning farmers. This type of loan must be used to partially finance the purchase of a family farm, with loan applicants contributing a minimum down payment of 5% of the purchase price and the FSA financing a further 45% up to a maximum of $300,000. The balance of the cost may be financed by a commercial or private lender, a cooperative or the seller.

To qualify for an FSA loan, women farmers must satisfy the eligibility rules of both the lender and the FSA. Typically, this will mean you have at least three years farming experience during the last decade. There may also be checks on business history, credit score, revenues and more. 

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.