3 Tips for Getting Financing

We’ve heard that it’s almost impossible to start farming now—even if you can find a great property, you won’t be able to find a lender who wants to talk to you.
3 Tips for Getting Financing - Articles
3 Tips for Getting Financing

Here are three tips we offer to get you started and keep you successful:

Create a great credit history

You may not have had a mortgage loan before, but that doesn't mean that you don't have a credit history. Your credit record includes your credit card information (how much credit you have available on each of them, if you have an outstanding balance, if any of your payments have been late), and other loan information (such as car loans, student loans, or any other mortgages).

If you don't have a credit history, there are other ways to create one, like getting information from past landlords or service vendors, such as gas and electric companies or telephone companies.

One of the most important parts of a great credit history - always, always, always pay your bills on time. Statistically, it has been proven that if you pay your current loans as you agreed to, you are more likely to pay future loans as agreed to as well. And that's good news for any lender.

Have a plan

You must have a plan for success. Create a business plan, whether it's in writing or something you can talk about. This is a blueprint for establishing and then meeting your goals. The plan should include what you want to do, how much money you'll need, and what ways you'll repay the money.

If you have never written a business plan, never fear. You can find information about doing them from your helpful Penn State Extension agent.

Ask about special financing programs.

When you talk with a lender about financing, be sure to ask about any special programs or partnership opportunities. We aren't just lending you money; we want you to look at all funding options to help you succeed. Here are a couple of programs to keep in mind:

  • StartRight - Mid Atlantic Farm Credit program geared specifically to young, beginning, small and minority farmers. We have low interest term, operating and best management practice loans.
  • Farm Service Agency - offering guaranteed and direct loans to qualifying borrowers.
  • Federal or State Funding - USDA and NRCS has several grant programs available. And don't forget about Pennsylvania state programs, like the First Industries Fund.
  • Small Business Administration - the 504 Loan program is a financing program for expanding farms

It seems like a lot to think about, but don't worry. You don't have to be the expert in getting financing - that's our job. You enjoy being the expert in your farm business.

by Amanda Ramer, Loan Officer, MidAtlantic Farm Credit

Authors

Amanda Ramer