Financial

Farm financing is critical to the success of any agricultural business operation. In this section, uncover information on agribusiness finance management, including budgeting, financial life skills, planning, value-added production, and pricing. Learn valuable tips and gain access to the FarmSense workshop and online course.

Agribusiness Budgeting

In agriculture, budgets are an important part of setting financial goals and measuring performance. Enterprise and partial budgets are two of the more valuable farmers finance tools utilized to establish a foundation for analyzing various management decisions.

Enterprise budgets refer to the estimates of receipts, costs, and profits from agricultural production. They are often used to create whole-farm budgets to estimate the profitability and resource requirements for a farm plan. Enterprise budgeting is also used in projected cash flow budgets, as well as during the process of selecting and analyzing the enterprises produced on the farm.

Partial budgeting serves as a planning and decision-making framework that is typically used to compare alternative management decisions’ costs and benefits. It focuses on the changes in income and expenses resulting from implementing an alternative. Learn how to create a partial budget and analyze its results during the Partial Budgeting online course.

Join Penn State Extension’s FarmSense workshop for detailed information on financial statements such as the balance sheet, income statement, and cash flow statement. Participants will further be provided with practical knowledge on organizing and using financial records to make informed agribusiness finance decisions. Additional resources to explore include the Penn State Farm Management Handbook and the Pennsylvania Farm Account Book.

Business Financing: Farm Loans and Farm Grants

Careful planning, along with understanding the financial resources available, is fundamental for successful farm financing. Numerous commercial lenders loan money to farmers and other agribusiness professionals who wish to fund an operation. To obtain a loan, it is generally required to develop a relationship with the bank and provide comprehensive documentation showing your ability to repay the loan.

When applying for agriculture loans, small-scale and part-time farmers can improve their chances for success by following sound management practices. These include budgeting cash flows, preparing financial statements in advance, and treating the lender as a valuable asset.

Many first-time borrowers, as well as agricultural operations that have been rejected by other lenders, are directed to the Farm Service Agency (FSA). The FSA has several different farm loan programs, offering support for land purchases and operating costs. The agency can also guarantee loans made by other institutions.

Farm grants are available; however, few do not require a research component. It is worth noting that careful research is needed to determine whether the grants listed are awarding funds at the time. Remember to contact the granting agency before completing the application process.

Farmers and growers can also apply for a research grant via the Northeast Sustainable Agriculture Research and Education (NE-SARE) program. The program provides assistance and sustainable agriculture grants for farmers wishing to initiate on-farm research.