Loans are available for commercial enterprises and also for farming or activities related to farming. The loans are available to those who run their own farming business like a commercial enterprise. Such loans are known as farm management loans.

Farming can become a successful commercial business. However, you must consider all the factors affecting its efficiency and profitability, in order to make it a successful venture. Obviously, the principles of management should be applied to farming activity also, to make a scientific study of the farming activity as a commercial enterprise.

The important factor of this analysis that emerges is the cost incurred in the production or at the initial stage. There are two types of costs: fixed costs and variable costs. Fixed costs are the expenses incurred on machinery, equipment, infrastructure, etc. Typically, these expenses are more at the beginning. Variable costs are the expenses incur on running the operation, such as oil or fuel for the machinery, feed, supplies, etc.

First, decide the type of farming activity. The basic types are dairy, crops such as potatoes, and cattle. Poultries, vegetable, and fruit tree farms or orchards, etc. are also considered farming activities. Whatever the types, plan accordingly, execute activity in a businesslike manner, and make it a success.

Farm equipment and machinery are essential initial investments. However, it is recommended to invest on them gradually as your farming business is picking up. Dealing with fixed costs this way does not put heavy burden at the beginning when the financial resources could be limited.

There are various loan programs available. Some of the programs benefit the farmers in a direct way. Others offer loans that help the farmers meet the requirements in an indirect way. Community banks, more familiar with the farmers’ requirements and more in need of customers, offer better loan programs than big commercial banks. The American Government also offers such loan programs through the Farm Service Agency of USFDA.

FSA offers Farm Loan Programs for farmers who are unable to obtain a loan from commercial loan agencies. Purchase of land, cattle, machinery, supplies, seeds, and similar basic requirements for the running of the farming activity can be taken care of with such a loan. This loan is also for the expenses incurred on activities such as construction or changes in the infrastructure, with the purpose of improving the farming operation.

The farmers who start the farming enterprise sometimes find it difficult to obtain the loans from commercial agencies, as they fail to qualify, as beginners with limited financial resources. Such farmers are benefited from loan programs offered by FSA, as their programs are intended to help the small-time farmers in the initial stages. However, FSA also offers helpful loan programs for seasoned and experienced farmers who have suffered financial losses due to natural disasters, or need economic help to expand their farming business.

Looking at all these loan programs can give you an idea about the financial help or credit that can be made available from commercial loan agencies or government agencies. The important thing is to understand that farming is like any commercial enterprise when run efficiently can prove a successful business venture. By managing your farming activities in a professional way, you can turn your farming activity into a profit-making commercial enterprise.

If you are a budding farmer dreaming of owning your own farm or a farmer wanting to expand or in need of money after some setbacks, then there are various options for obtaining a farming loan.

There are many banks that offer farming loans at reasonable rates of interest. Check out the rates of different banks and also check their re-payment terms before deciding. But banks will ask for collateral or guarantees which might be easy for bigger farmers. In this case it could be possible to get a loan from the government guaranteed banks, which are available through their affiliated banks and financial institutions. This department is handled by the United States Department of Agriculture [USDA] and is called the FSA [Farm Service Agency].

Getting a farm ownership loan will now become easier with the United States government proposing several changes to the rules and forms for farmers, and ranchers wanting to procure farm loans by 1st January-2008.

This means that there are fewer pages in the code of federal regulations and less forms to be filled up. Previously there were 40 instruction manuals which have been replaced by 6 handbooks and all the forms are now available online. The new program rules will be applicable from 1st January-2008 and until then the old rules will apply according to FSA.

You too can get a loan from your local bank or financial institution in your area, which is authorized by the government to do so. They advance you the money to take over a farm i.e. take over the land and all fixed assets such as any constructed buildings on it as well as the plant and machinery on it. They also lend you money to purchase new farming equipment and other improvements, which may be needed to improve the water and soil quality and ensure conservation.

These loans can also be used to purchase livestock, their feed and seeds for farming. FSA Loans are provided to new farmers who might not qualify for a loan from regular banks or financial institutions. Regular banks ask for guarantees and collateral which not everybody might be able to furnish. Even regular farmers who have limited finance or have suffered losses due to natural disasters can qualify for this loan. You can go to their website or approach your local bank or institution authorized by them for details of obtaining a loan. The government guarantee is given to these authorized banks to repay most of the loan if the farmer is unable to do so.

You can also take the services of a farm loan broker who can assess your needs regarding the amount of loan you require and the re-payment period etc. He can then get you the best loan possible at the best interest rates since he would know about the available options. His knowledge will benefit the both of you and help you in getting a loan faster.

Thus owning and running your own farm will no longer remain a dream and you too can avail of a loan to get your own farm started and running.

The emergency farm loans are made available through Farm Service Agency (FSA) of USDA. These are provided to the small farmers or businesspersons to help recover from production and material losses caused by drought, flood, other natural calamities, or quarantine.

A summary of the loan fund uses:

1) To restore, repair or replace, or to acquire or increase the property permissible by the rules and regulations of this loan.

2) To pay all or a portion of the production expenses that incurred related to the year of the disaster.

3) To pay essential sustenance costs to run the family.

4) To rearrange the agricultural schedule.

5) To refinance the debts permissible by the regulations of this loan.

Eligibility conditions:

. The applicant for loan must own or operate land in the county where the disaster has taken place. The claim of being from a disaster area must meet the requirements of this loan.
. The applicant must fulfill the conditions to qualify as a farmer.
. The applicant must be a US citizen or permanent resident of USA.
. The production losses suffered and claimed must be at least 30 percent in crop yield, or physical losses in terms of damage to livestock property, livestock products, real estate, or chattel
. The applicant must have a satisfactory credit history
Applicant should be able to provide collateral for the loan
. The applicant must have the ability to repay the loan

Some additional FSA loan requirements:

The applicant must keep farm records as prescribed. The applicant may have to undergo a training program related to financial management and acquire crop insurance

Need for collateral: Collateral is needed for an emergency farm loan. The details of it may vary as per the intention, ability to repay, and individual requirement of the applicant. If the applicant is unable to provide collateral, the ability to repay can be considered as collateral. Whatever property or yield acquired, produced or refinanced with the loan is used to create a first lien.

Loan limit: Emergency farm loan can be availed up to maximum amount of $500,000 or for maximum recovery of 100 percent for the actual losses suffered in terms of physical or production damages.

Loan terms: Loan taken for actual physical losses such as crop, livestock and chattel is to be repaid within a period of 1 to 7 years. This period is decided over the factors such as the need to seek this loan, ability to repay, and available collateral. This period can be extended up to 20 years as well, if need be, in special cases. The period to repay loans provided for physical damages to the real estate is up to 30 years, in general. However, in some situations, this period may be extended up to 40 years.

Interest rate: The present annual interest rate for an emergency farm loan is 3.75 percent.

Application deadline: Application for emergency farm loan must reach the concerned offices within 8 months of the disaster designation date or quarantine designation date.

Temporary assistance: Emergency farm loan is considered a temporary credit source. Borrowers should turn to other commercially available sources of credit. Borrowers are reviewed periodically to check if their ability to return to mainstream credit sources in the commercial market.