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The old cliche about farmers wearing many hats is as true today as it's ever been, and one of the essential tasks facing many farmers is finding the right financing to get the land, tools, equipment and supplies they need.
If you're a farmer looking for a business loan, there are many different financing options available. Let's take a closer look at what those options are and how you can find a loan that matches all your borrowing requirements.
There are many different loan types available, each of which is designed to meet a specific funding need:
Loan amount | What is it? | Features | |
---|---|---|---|
Term loan | From $10,000 | Allows you to borrow a lump sum and pay it back over a set term. |
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Line of credit | From $10,000 | A revolving line of credit, with a predetermined limit, which you can access whenever you need. |
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Overdraft | From $10,000 | A revolving line of credit linked to an existing business bank account. It provides quick and easy access to funds when you need to overcome a cash flow shortage. |
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Equipment finance | Cost of equipment you need to purchase | Allows you to access the equipment your farm needs without having to pay for it upfront. The asset purchased is typically used as security for the loan and you buy it off the lender in instalments, or lease it for a set period. |
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Livestock finance | From $25,000 | Provides the funds you need to buy new livestock, re-establish stock numbers and cover animal health expenses. |
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There are several important factors you'll need to take into account when searching for the right business loan for your farm, including:
Make sure you consider the following factors when shopping around to compare your farm loan options:
Lenders will assess a number of factors when considering your application for a business loan, including:
It's often possible to begin the application process for an agribusiness loan online. Alternatively, you may wish to call your chosen lender first to discuss your financing needs and the products they have available.
If you need specific advice on finding the right loan and how to apply, it could be worth chatting to a finance broker about your requirements.
Kevin runs a 300-acre tea tree farm in northern NSW. When his ageing tractor's mechanical problems keep delaying the harvest, putting Kevin behind schedule and costing a substantial amount in man hours and repairs, Kevin decides it's time to invest in a new tractor.
However, Kevin doesn't have the $50,000 needed to buy the model he wants, so he decides to compare his loan options. After studying a range of equipment finance solutions, Kevin chooses a commercial hire purchase arrangement which will see his bank buy the tractor outright, and Kevin then purchase the tractor from his bank in instalments.
This gives Kevin the freedom to pay off the loan over a term of five years, while he can claim both the interest on his loan and the depreciation in the tractor's value as tax deductions.
Yes. Under the Farm Business Concessional Loans Scheme, the Australian Government has made $250 million available to farmers until 30 June 2018 for the following:
You can find more information about the Farm Business Concessional Loans Scheme on the Department of Agriculture and Water Resources website.
Yes. Many lenders offer specific loans and interest rate offers that are only available to primary producers.
Seasonal finance refers to loans and lines of credit that only need to be repaid during the months when your farm earns a profit.
You'll need to provide bank statements, tax returns and cash flow projections to prove your income. Other documentation required will depend on the type of loan you apply for.
Picture: Shutterstock
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Does your bank provide concessional loans for the funding of a tea tree crop establishment? This would allow us to add to our existing operation from 12 ha approx plantation, up 100 ha approx to be viable for the long-term…We have the necessary cultivation, planting & harvesting machinery.Regards Robert
Hi Robert,
Thanks for getting in touch with finder. I hope all is well with you. :)
We currently don’t have a page that lists lenders who specifically provide concessional loans. Please note as well that we don’t represent any company or bank that we feature on our page.
What you can do is compare your options using our table. Once you find the one that appeals to you, click on its “Go to site” green button. From there, you can then ask specifically about concessional loans. Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua