What Are the Requirements to Qualify for An Ag Loan?

While not drastically different from regular loans, there are some agriculture loan requirements that are specific to the farm and agribusiness industries. Requirements may vary from lender to lender, but here’s our breakdown of how to qualify for an agriculture loan.  

Typical ag loan requirements for direct ownership loans

Direct ownership loans are designed to help farmers purchase or expand their farms or farm businesses. These loans provide assistance to farmers who have the necessary experience but lack the financial resources to buy land or make significant improvements to their existing operation. These agriculture loan requirements include: 
 

• Be a U.S. citizen or permanent resident
• Have acceptable credit  
• Demonstrate the ability to repay the loan
• Have legal capacity to incur the obligations of the loan
• Provide a feasible business plan 

For FSA loans in particular, you also need to prove that you are unable to secure credit from a traditional financial institution and you need to own or operate a family-sized farm. 

Operating loan requirements

Operating loans are essential for covering day-to-day expenses on the farm, including inputs and labor costs. These loans provide the necessary funds to ensure smooth operation and financial stability throughout the year, but they typically have an additional requirement of providing suitable collateral to secure the loan. 

New and beginner farmer loans

Young and beginner farm loans are designed for individuals who are new to farming or have limited farming experience. These loans help aspiring farmers overcome financial barriers and establish a successful farming operation. Additional beginner agriculture loan requirements could include: 

• Meeting the eligibility criteria for direct ownership loans
• Being a new/beginning farmer with 10 years or less of farming experience
• Participating in a borrower training or farm management program 

At Horizon Farm Credit, the requirements for a new and beginner farm loan are a bit more flexible to include relaxed underwriting standards and access to an online ag business learning program called Ag Biz Masters. 

Horizon Farm Credit loan requirements

These are general requirements and may vary slightly from lender to lender. It's always a good idea to check with your preferred lender for a list of their specific requirements before applying. At Farm Credit, some of the specifics we’ll ask for include: 

• 20-30% down payment (some exceptions apply)
• Three years of tax returns
• Bank Statements
• Business Plan  
• Balance Sheet
• Asset verifications like stocks, mutual funds, retirement accounts, etc.
• Pay stubs or YTD profit and loss statement
• Copy of your Driver’s License 

Farm Credit is committed to helping you navigate the agriculture loan process and secure the loan that best fits your farming needs. From direct ownership loans to beginner farmer loans, we're here to make your farming goals a reality. So, don't hesitate to reach out, and let's cultivate your farming future together.