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I want to start a farm, or I have started to farm. What about loans, grants and other sources of capital to help me?

Financial decisions about your farm operation are complex. It is likely that you will need to finance some aspect of your farm business. Farmers in their first ten years of operation may need loans for real estate, operating and/or acquisition of buildings, equipment or livestock. There are various loan programs for farmers, some targeted to new farmers. But grant money -- that is, money given, not loaned -- is very rare. How much debt -- if any -- you are willing and able to carry is a personal choice. There are also strategies to reduce costs and avoid or minimize debt.

Here are some things to think about:

  • Usually, the best place to start is with your farm business plan. It should provide you with solid information about your borrowing needs. It will also inform you about your ability to carry debt. This is critically important. It may make sense to seek advice from a financial consultant who is familiar with your business.
  • It may make sense to seek advice from a financial consultant who is familiar with your type of business.
    There are quite a few loan programs available to new farmers. Check out the programs to determine eligibility, specific rules, loan limits, etc.
  • Often, the biggest complaint from farmers pursuing loans is the amount of paperwork involved. Be prepared for this. Be prepared by having your request, your business plan, and supporting materials in hand when visiting a loan officer.
  • For a loan, commercial banks are typically the place to start. Some smaller community banks are more familiar with and interested in lending to farm businesses.
  • The federal government, through the USDA Farm Service Agency has a variety of loan programs. Their beginning farmer loan programs include low interest direct and guaranteed loans to qualifying beginning farmers. You may need to show that you were turned down at a commercial bank.
  • Some states, but only one in the Northeast (PA), have a beginning farmer loan program known as an "Aggie Bond" program.
  • The Farm Credit System has a Young, Beginning and Small Farmer loan program. Farm Credit offices cover every state.
  • Sometimes, community development corporations, other community-based economic development agencies and some private non-profit groups offer business, "micro" and other loan programs to small businesses, including farming.
  • The USDA Northeast Sustainable Agriculture Research and Education (SARE) Program offers grants to farmers to experiment with sustainable production practices. You must have your application selected to receive funding.
  • Sometimes, farm businesses borrow from "family, friends and others". Some farm businesses use credit cards. There are advantages and disadvantages to these options.
  • Consider strategies to reduce costs and avoid or minimize debt, for example not purchasing real estate, starting small, acquiring used equipment, custom hiring, and exchanging with other farmers.

Here is a sample of resources:

For Farm Loans, investigate Farm Credit Services and the USDA Farm Service Agency.

Search online for Commercial Lenders; places to start might include and (reference book)

Northeast Sustainable Agriculture Research and Education (NE SARE) has a grants program for farmers interested in testing new ideas and farm techniques.

Building Better Rural Places is an index of federal grant and loan programs for agriculture and rural development available through ATTRA.

Community Development Corporations: you can find them through your local Chamber of Commerce, or the National Congress for Community Economic Development.

The Foundation Center has an extensive listing of foundation and grant opportunities in all areas.



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