All posts by American AG Finance

35 Years of Agricultural Lending

I started loaning money to farmers over 35 years ago. We made short term farm loans, Agricultural land loans, Ag land purchase loans. We had several farm loan programs. All the paper work we needed for an operating farm loan was an application, A signed mortgage, and a checkbook. Agricultural land loans required a few more pieces paper but not many. All the paperwork I needed for regular farm operating loans was these three items. Compare that with what we need now. Farm loans and agricultural land loans require an application, financial statement, credit report, appraisal, three years of tax returns, W2s for last two years, bank statements, other statements on liquid assets, title company work, and the list goes on and on.  Agricultural banks are required to hire additional people due to all the paperwork.

Back in that day the borrower was the most important thing to agricultural Lending banks. His creditability, honesty, and ability, were the most important things. It seems like now the borrower doesn’t really mean much as long as you get all the paperwork completed and the answers to all the questions are correct or what they think the answers should be the loan gets approved. Little thought is given to the borrower and his desire and ability to repay the loan. This seems to be especially true in ag land purchase loans.



Why is this? Well the main reason is over the years a few dishonest borrowers and their attorneys found a way to get buy by not paying back farm loans because of some reason. So, then the lender had to add an additional piece of paperwork to close the loop, so no other borrower would use this loop to get by and not pay the loan back. Each time this happened another requirement was added, and a new piece of paperwork was developed, and borrower asked to sign and that gets to the place where we are now.  Sometimes the paperwork we need for most farm loan programs overwhelms the borrower and I can sure see why.  Agricultural banks seem to be getting fewer and fewer.

I would like someone to develop a document that the borrower could sign that would hold up in court whereby the borrower agrees to pay the loan back and forfeits all means used to not pay.

Importance of Farm and Agricultural Land Loans for Farmers

In over thirty years of financing agricultural I have originated farm loans, agricultural land loans, Ag Land purchase loans, and dealt with a host of Farm Loan Programs. Some of which have been government programs and others programs we have established in our bank. In the banks I was affiliated with the farm loan programs were the most popular.

Most of the long term agricultural land loans before the late 1980s were originated by the Federal Land Bank and some Insurance companies. Then during the farm crisis of the late 80s Farmer Mac was started. The purpose was to be able to poos and secure ag land purchase loans and sell just as Fanny May was doing with home loans. Now the Federal Land Bank is known as Farm Credit Services and is making long term agricultural land loans, along with Farmer Mac, and some insurance companies.

Interest rates tend to be usually 2 or maybe more points higher for these commercial farm loan programs. The rates would be on a par with other commercial long-term loans. Long term loans would be defined as loans with an amortization of 25 years or more.



The Agricultural Banks would be primarily in the rural areas and tend to be smaller banks. However, with the amount of money needed by these larger farming operations these small banks sometimes must rely on larger city banks to assist them with the farm loan programs.

Financing farmers and agricultural enterprises is challenging for agricultural banks. Getting adequate security on farm land loans is not difficult as you can take a mortgage on the land and be secure.

However, getting a secure position while financing livestock, machinery, and growing crops is more difficult. Unlike automobiles large pieces of equipment do not require titles that you can hold. You only must rely on serial numbers posted on the equipment etc.

Financing agricultural with various forms of agricultural land loans, farm loans, and ag purchase loans has been challenging over the past 30 years but enjoyable.

Pros and Cons Related To Home Equity Loans

With the refinance craze that has swept the country for the past few years many people have gotten caught up in the hype surrounding these types of loans. But before anyone decides on getting a home equity loan it is a good idea to look at the pros and cons of doing so. Getting a home equity loan is a serious financial decision and as such needs to be thoroughly researched so that you, the borrower, know the ramifications. Probably the first thing that you need to be aware of is that a home equity loan is, in essence, a second mortgage on your home, and as such carries all the terms and conditions of a first mortgage.

On the pro side, there is a definite upside to getting a home equity loan. The obvious thing is that you will get a large infusion of cash that you can use for just about anything you want. Once you have signed the papers you will probably receive your check after the closing of the loan is completed. Once the check is in your hand you can use that extra cash for remodeling your house, buying a new car, paying off credit card debts or even invest it and try to make more money. You will also be able to deduct the first one-hundred-thousand dollars of interest on your income tax returns, which can be a large tax savings for you.


You will also have to weigh the disadvantages of getting a home equity loan as well. You must be certain that you can make those monthly payments, in addition to the payments on your first mortgage. Having two house payments a month can be a strain on many people’s finances, particularly if you or your spouse were to lose your job. You also need to make sure that the market for housing in your area is stable. A sudden housing market drop and even selling your home may not produce enough cash to pay off both of your mortgages.

Many people use a home equity loan to pay off other debts, hoping that consolidating many payments into one will make their financial situation better. While this may look good in the short term you need to weigh the benefits against the long-term interest you would pay on a home equity loan. Sometimes it may make better financial sense to simply pay off your other debts without the added risk of using your home as collateral.

The pros and cons of a home equity loan are many and it is important that you look at both sides of the equation carefully. Don’t be blinded by a large amount of money and what you could do with it. Realize that you are putting your home up as collateral and if for some reason your financial situation takes a turn for the worse your home could be taken away from you. Weigh the pros and cons of a home equity loan carefully before you make your final decision

Find the Difference Between Farm and Agricultural Land Loans

There is a difference between (Farm Loans) and (Agricultural Land Loans). Farm loans would include loans for purchase and refinance of agricultural producing property. These are usually paid over a period of 25 to 30 years. Farm loans could also include operating loans to purchase seed, fertilizer, etc. or anything needed to establish a growing crop. Farm loans would also include loans to purchase machinery needed in the farming operation. Farm loans could also be made to pay living expenses until crop is harvested.

Agricultural Land Loans on the other hand are made exclusively for the purchase of real estate used to produce farm products. They can also be used to refinance long term loans. Agricultural Land Loans must be made on property that produces agricultural product. A 5-acre piece of property with no crops of any kind would not qualify. Most Agricultural Banks are more interested in the shorter-term farm loans than the long term 30-year loans. However American Ag Finance is interested in the long-term loans used to purchase or refinance AGRICULTURAL property. Rates would be competitive with other commercial long-term loans.

Please check the web site “” to see if there is a “Farm Loan Program suited for you.

Important Points to be Consider When planning for Agricultural Land Loans

If you are into agriculture and have farm land and also animals at that point there is a high chance that sooner or later in time you may require an agriculture loan. There are a few unique sorts of agricultural loans accessible including particular loans for farm land, live stock, and some other farming related needs. Yet, the inquiry is how to get agriculture loans?

If you needed agricultural loans then there are some criteria to consider before you applying for the loan. The diverse aspects include:

Business Plan: As a current farmer and new farmer or another agriculturist applying for agricultural loans, the initial step is to set up a detailed and interesting business plan that will throw light on the cash flow forecasts for the coming future. The projection of the cash flow within your business plan will enable your bank to see how much loan amount you to require and the amount you are fit for paying back.

Look at terms: There are a few financial institutions that offer agricultural loans and every organization has its own particular rates and least loan amount. Before you apply for agricultural loan it is almost the best idea to look at the different points of the loan like minimum amount, installment period, lending terms, marginal payment options and considerably more. You can analyze the above information offered by banks, Farm Credit Associations and financial institutions on the internet.

State Agricultural Finance programs: Most US states offer a few state agricultural finance projects while different verities of the states offer at least one loan program. Loan programs and State agricultural finance incorporate each and everything from farmer loan to short-term farm land loans, livestock loans, disaster recovery loans, agricultural loans, seasonal loans, equipment loans and so on. One of the important and famous state agricultural finance programs is the Aggie Bond Beginning Farmer Loan Program. This program is as of now accessible in 17 states and encourages new farmers to get loans at decreased rates for domesticated animals, purchasing land, and so forth. You can get detailed information on agricultural loans and state agricultural finance programs at the National Council of State Agricultural Finance Programs.

Agricultural farm Land Loans

Commercial lenders: You can check the different offerings by commercial lenders like financial institutions and banks also. There are a few business commercial lenders who have some expertise in various sorts of agricultural loans. There are around 2,500 farm banks the whole US that offer agricultural loans at best interest rates. You can likewise look at with banks since they offer more farm loans than any Farm Credit System in the US.

An agricultural loan is exceedingly adaptable and comes up with loan refinancing alternative. As you refinance a loan you take another loan to avail more appropriate terms and conditions than the past loans. This implied in case of tenure period or rate of interest or any other rules and regulations. For instance, if your present agricultural loan has a high rate of interest, you can refinance agricultural loan to avail a low rate of interest. With a refinance loan you can likewise stretch up or shorten the time period of your current agricultural loan. Therefore, it is always advisable to do an intensive research and choose a reasonable bank before picking the best of the agriculture loan.

How Can Agricultural Loan Help Farmers to Grow?

If you have been even remotely related to agricultural business, you will have a fair idea that agricultural business can be expensive in a lot of ways. If you are new to the industry of farming, it is very likely that you will need financing because the cost to start up the whole business can be pretty overwhelming. But there is nothing to worry about; this is where the agricultural loan plays the important role.

These loans are specially designed to be used by the new people in the industry and there are a lot of ways in which these loans can be used to help you in getting your business high and running and also expand your operations at the same time. If the loans are used constructively, they can really promise you success.

Before you go ahead with applying for the loan for your business, you need to sit down and figure out the right ways to spend that money. You need to figure out what are the resources that need your money the most and the first. How much money do you need roughly? How are you going to go about the business plan? These are a few things you should have clarity on first and foremost to obtain the loan and this plan will help you make sure that you use your loan wisely.

Here are a few tips to use your loan wisely:

  • You can buy your farm equipment. There are lists of things that are mandatory to have if you are starting a farm business like tractors to help you irrigate. But these tractors come with a real heavy tag; initially, you can consider renting one. And once you have flourishes well you can buy a few of your own. For someone who is new in the business it is hard to believe the price of the equipment that is used in farming, but if you have researched well, it won’t come as a shocker. But if you have been in this line you will already have an idea what all you will need. Once you have figured the equipment according to your need, you will be able to take care of your payments well.

  • What do you need from the list of crops to grow, what business do you want to get in. also, what’s the necessary filler for it, just seeds and dirt you think? No, that’s not it, you will also need fertilizers, tools, patience, harvesting, and money for all the costs that are associated with it. Once you take a loan it is going to help you in buying all these necessary fillers to fulfill your needs of crop growing. And there is one thing you should know, there is going to be no money till the harvesting season is here.

  • You can also purchase or take lands on lease with the agricultural loan. The dynamics of buying the right land can be a bit tricky and would also depend on the crop you choose to harvest. You will need a plan to understand what kind of land and how much of it do you need. What is the cost that you will have to pay for it? And also would you be able to repay that your loan from the harvest you choose to do.

  • If you have agricultural loans already pending, you can take the option of refinancing. This process is going to make you take out a new loan but on a lower interest and pay off the higher interest loan from that. Because if your interest is more than what you are saving, there is no point on lingering over the old loan. This wouldn’t completely free you from the loan process but at-least save you from high interest.

  • It is very important to do the right kind of promotion of your products once your business is doing well in the market. There are a lot of promotional activities that you can go for like brand logos, PR activities, fliers, online promotions, focused ad campaigns etc. If in case you are not someone who is much aware of all these branding technicalities, you can always hire consultants who can advise you well on what all can be the best marketing practices for you. Like for example, a trade journal is a very good way to improve your PR with business to business customers and online marketing can be used for retailers and portals.

  • This loan can very well be used in growing your business too. When you started this business you were spending massive amounts of money on equipment, land, supplies etc. expanding will also demand the same kind of attention and investment from you.The farming business is not a cake walk. It is very fluctuating and unpredictable. You will not be able to guess when is your crop going to give you great returns and when nothing. You absolutely depend on the buyers and consumers.

The Conclusion : If you are a part of the farming industry you will have to understand that it is not a very easy business to do. Agricultural loans are very helpful in expanding or initiating the business. This loan can take the business to a different level altogether. So make sure you use your loan wisely in helping your business do well.