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Women frequently take on a larger share of family and community responsibilities. In return, they risk missing out on opportunities to grow their businesses. Financing can help alleviate critical challenges entrepreneurs face, especially for women. Farm loans make it possible to jump-start a business and launch new levels of growth.
Financing allows farmers to cover startup costs, purchase supplies, upgrade equipment, and much more. Despite the critical role farm loans play, some women may face additional barriers that can make it more difficult to secure the funds they need.
Take a look at this complete guide to farm loans for women, including how they work and what to expect for the application process.
What Is a Farm Loan?
Farm loans are business loans specific to farmers and companies operating in the agricultural industry. Farm loans can be used to purchase the land needed for agricultural operations, as well as other costs like livestock, equipment, and more. Farm loans can come in a variety of different forms, but what makes them unique is the way they cater to agricultural business needs. For women entrepreneurs, farm loans can provide access to capital when traditional funding sources are dead ends. In the past, women were disproportionately declined for financing because they couldn’t meet the robust eligibility requirements of their gender counterparts. This has changed dramatically over the last few decades. Today, women entrepreneurs have widespread access to business capital, especially when it comes to farm loans.Benefits of a Farm Loan for Women
Women looking to launch their agricultural business or grow their current enterprise may be able to seize on a variety of opportunities by seeking out funding. Here are a few of the many benefits.- Streamlined cash flow
- Increased purchasing power
- Ability to take advantage of opportunities immediately
- Enhanced forecasting
- Extended repayment for major expenses
- Opportunity to purchase necessary equipment and other assets
Types of Farm Loans for Women
The agricultural industry represents 18% of the entire U.S. economy, with women constituting a significant portion of this critical sector. According to a 2019 Census of Agriculture report, it’s estimated that 36% of all U.S. farmers are women and that 56% of all U.S. farms include at least one female decision-maker. Farm loans are a critical resource, allowing women to take full charge of their businesses to reach their goals. Take the time to go over different types of farm loans to understand how each solution works and which option would be the best fit for your business.Type of Financing | Description |
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SBA Loans | Small Business Administration (SBA) loans are government-backed financing solutions offering a number of benefits exclusively for small businesses.
SBA loans are renowned for featuring some of the lowest interest rates on the market. These loans also come with high funding amounts and lengthy terms that can be used to cover just about any type of business expense, including operating costs, real estate purchases, and equipment financing.
To qualify, businesses must be:
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FSA Loans | The Farm Service Agency, or FSA, offers both government-back guaranteed loans and direct loans for farmers, ranchers, and other business owners in the agricultural industry. Proceeds can be put toward purchasing land, livestock, seeds, supplies, equipment, and more. Farmers can also use an FSA to cover construction or renovations on their property. Funding amounts on FSA loans can be as high as $949,000, with repayment terms as long as 40 years. To qualify for a guaranteed FSA loan, businesses will need to meet a number of requirements from both the lender they’re working with as well as the FSA. At a minimum, you will need to have at least 3 years of farming experience out of the 10 past years. Depending on the lender you’re working with, there may also be requirements for business history, credit score, revenue, and more. One way to bypass some of the credit score requirements is by applying for an FSA loan with the FSA directly. You can reach out to your local USDA Service Center for information and to submit a loan application. |
Term Loans | Term loans are structured as traditional business loans where you’ll receive a lump sum of capital to be repaid over regular installments. Term loans can be short-term, ranging from less than a year or as long as 25 years in other cases. Term loans are great for breaking down large purchases or investments into more manageable payments. You can use a term loan to finance real estate, land, equipment, and pursue growth opportunities. Many businesses will also take on debt refinancing or debt consolidation with this funding type. The best way to approach a term loan is by having a strong estimate of exactly how much funding your business will need. From there, your payments will stay consistent over the duration of the loan. |
Business Lines of Credit | Business lines of credit are revolving credit lines you can withdraw from as capital needs arise. They work somewhat similarly to credit cards, except they feature higher funding limits. Business lines of credit are renowned for being incredibly flexible. As you pay down your balance, you can reassess the same funds to use again and again. This funding type can be put towards all major types of business expenses. Many firms will even use them as an emergency fund to cover unanticipated costs. |
6 Farm Grants for Women
If you’re looking to start your farm business or make a significant investment, farm loans are the way to go. They offer high funding amounts as well as an opportunity to break down significant costs into more manageable chunks. Although smaller in size than farm loans, grants can be another worthwhile financial resource to explore. Take a look at some of the top financial resources for female farmers.Vermont Farm Women’s Fund
Offers grants and scholarships to women farmers hoping to build their businesses and expand their education in agriculture.WAMS
Also known as the Women and Minorities in Science, Technology, Engineering, and Mathematics Fields Program, this grant offers up to $300,000 to support research into various agricultural projects.SARE Grants
This program offers up to $250,000 to be put toward research projects that aim to advance agricultural practices.FruitGuys Community Fund
This program provides up to $5,000 to help small farmers and nonprofits become increasingly sustainable.Young Farmer Grant Program
This program is geared toward young and budding farmers who would benefit from an additional financial push. They have a history of providing 50 selected farmers or ranchers with $5,000 in funds.Fund-a-Farmer Grants
Offers farmers and ranchers working with livestock up to $3,000, with the aim of improving their animal welfare.American Agri-Women Foundation
Offers farmers and ranchers working with livestock up to $3,000, with the aim of improving their animal welfare.Farm Loans for Women: How to Qualify?
To qualify for farm loans, women entrepreneurs must meet the relevant minimum qualifications. There are three main criteria: time in business, annual revenue, and credit score. These vary from lender to lender, but here are National Business Capital’s minimum eligibility criteria.- 1+ Year in Business
- $500,000+ in Annual Revenue