State and federal governments provide financial resources and assistance to farmers who have trouble making ends meet or want to upgrade or expand an existing farming operation in recognition of the fact that farming is important to the economy and the wellbeing of American people.Grants and loans are available for farms that are well-planned and run by individuals with the education and experience to ensure they succeed, even though these programs are limited.
Step 1: Analyze your location.
To be eligible for grants, you need to be able to demonstrate that your farming activities have been successful in the area where your farm is located.While you may think you're prepared to run a farm, you need to look at your background from the point of view of someone who might invest in your operation but knows nothing about you.Having experience in farming operations will give the government agency confidence that the money will be used wisely.Experience running a small business can be a benefit.Your farm is a business, and an understanding of basic business organization and financial principles will inspire confidence in agencies considering whether to give you a grant.
Step 2: A business plan should be created.
A loan or grant for a farm is the same as a small business loan.To be eligible for assistance, you must show that you are treating your farm as a business venture and expect to make a profit from your work.There are a lot of resources for business plans online.The Small Business Association has a website as well as the U.S. Department of Agriculture.If you want to build your farming business plan, your state agricultural department and nonprofit farming organizations may be able to help.The content of components in a farm business plan will be different from those in small business plans.You will need sections for marketing, production and operations, human resources, and finances.Detailed reports on your farm's income and assets must be included in your financial section.
Step 3: You can check your credit.
If you are applying for a loan, your credit score will affect your qualification.Your personal credit history is the most important factor in determining whether or not you can get a government-insured loan.You should check your credit report to make sure you know what's on it.You're entitled to at least one copy of your credit report each year, and you can contact the credit bureau if there are any errors you need corrected.You can get a free credit report at annualcreditreport.com.This is the only site endorsed by the federal government.Other sites may require you to purchase a credit monitoring subscription in order to give you a free credit report.If the farm has existing loans or lines of credit under its employer identification number, it may have its own credit history.
Step 4: Ownership and legal documents should be gathered.
As part of your grant or loan application package, you must provide documents showing that you own any land, livestock, or equipment you intend to use in your farming business.If you want to operate a farm on the land you own, you'll need copies of the deed to include with your applications.It's an asset for your farm.You'll probably need copies of your lease if you lease farmland.Any major farm equipment lease is the same.
Step 5: See state and federal opportunities.
There are grant programs for various aspects of farming.The grant application process is very competitive since you don't have to pay back grant money.All state departments of agriculture can be found on the USDA website.The state departments of agriculture can be found on the home page.If you click on the Beginning Farmers link from the USDA home page, you can find information about grants for those who are just starting their farming operation.Grants have strict deadlines and budgets.If you've looked at the information for a particular grant and decided you want to apply, write it down in a prominent place so you have it in mind as you work on your application.Federal opportunities tend to be broader in application, while state departments have more specific programs that would suit your needs.
Step 6: You need to complete the grant applications.
Before you start filling out the grant application forms, you should read through them carefully to understand the information that will be required.Through your application, you want to show a picture of a farmer who is worthy of the money.Information about your farming business is required for the grant application.You can copy this information from the business plan you created.The purpose of the grant should be the focus.If you apply for a sustainable agriculture grant, you should focus on the sustainable methods you're using and your financial needs with implementing those methods.Your grant proposal will be developed from the purpose.The goal you hope to accomplish with the grant money is described in the proposal.Grants for beginning farmers are usually only available to operations that have been going for a while.Make sure your farm is within the grant's limits by checking the requirements carefully.Grants have limited budgets.If you don't want to count on grants to cover all of your financial needs, you'll need to look for loans, and some programs may only offer a few hundred dollars.
Step 7: Your grant applications should be submitted.
Before you send your grant applications to the appropriate government agency, make copies of them.Make sure you send your application in advance of the deadline since grants are very competitive.Grants that require you to submit additional documentation, such as a copy of your business plan or a financial statement, typically will have a checklist of documents that must be included along with the application form itself.If you're mailing a paper application, make sure you leave enough time for it to get there before the deadline.Grant deadlines usually run from the date the department receives your application, not the postmark.Some grant applications can be completed online.You need to make a copy of your application for your records before you submit it.
Step 8: Wait to have your application processed.
It will take several months before you find out if your application has been approved, because grant applications can be lengthy.An approximate processing time may be included in the grant information.If it does, you might make this on your calendar, but don't treat it as a hard deadline.When the grant's application acceptance period closes, any processing time estimates don't begin.You might be contacted by someone from the department who wants to ask you questions or give you more information to complete the process of your application.
Step 9: The required reports need to be submitted.
If you get a grant, you have to submit regular reports to the government agency.The reports give a snapshot of the financial health of your farm and detail how the grant money is being spent.Regardless of the amount of money you receive, federal grants typically have standard reports that are required.There will be more reports for a multi-year grant.All grants require you to file a final narrative report detailing your activities, production, and how you met your goals.Interim reports, including budget reports that detail how you spent the grant money each year and the progress you've made toward the goals outlined in your application, are required for multi-year grants.
Step 10: Evaluate federal and state loan products
Grants are usually not available in the form of loans for a farm.Government-insured or guaranteed farm loans have benefits you wouldn't get from a traditional small business loan, such as lower interest rates and more flexible payment terms.The Farm Service Agency is part of the USDA.Most of these loans are intended to be temporary stop-gaps to get your farm to a point that you can be approved for a traditional commercial loan to meet any ongoing funding needs.These loans can be a good fit for people with bad credit, as they are restricted to applicants who wouldn't otherwise qualify for a traditional commercial loan.Some loans are only available to farmers who are unable to meet their funding needs through traditional commercial lenders.It's worth doing all you can to meet your funding needs through private lenders before applying for government loans, as the government department will make its own assessment on whether commercial lending is available to you.
Step 11: Farm bank loans are a good idea.
Farm banks handle more farm real estate and production loans than the average bank.Many of them have the word "farm" in their name.The American Bankers Association website has a list of these banks.Farm banks have a better understanding of and commitment to farmers and farming businesses.A traditional commercial bank would not be willing to work with you on certain farm-related issues.Farming income may be seasonal, meaning that your payments on the loan would fluctuate through the year, which is why a farm bank understands this.
Step 12: Make a list of loans that will meet your needs.
Loans can only be used for certain types of farming activities.Some loans may only be available for beginning farms, while others can be used for existing farms that have been in operation for several years.Some loans are restricted to certain regions.Federal-guaranteed loans may only be available to farmers in certain parts of the country, while loans insured or guaranteed by state governments or nonprofit organizations may be restricted to specific counties.Make sure you read the loan requirements carefully.Some loans have reporting requirements similar to grants that are designed to confirm you're using the proceeds of the loan for the intended purpose.Don't apply for a loan just because it's available.If you want to grow soybeans, don't apply for a loan for corn farmers.Financial penalties may be incurred if the lender discovers that you are not a corn farmer.If you fudge information on your loan application, the government will bar you from applying for government loans in the future.
Step 13: You need to complete the loan application.
The farm loan application requires you to provide information about yourself and your finances, as well as your farming activities and the purpose for which you are requesting the loan.The application will be more detailed than the ones you've submitted for credit cards or consumer loans.If you were taking out a commercial loan for a small business, you would have to provide the same information.You will be expected to list all assets, including their value, as well as all debts.You may be required to submit a full business plan as well as detailed financial reports regarding your farming operations.If you've incorporated your farm, or are operating it as a partnership or other business entity, the lending institution will typically require you to submit copies of your business organization paperwork.
Step 14: You can submit your loan application.
Make a copy of the entire package for your records before sending it to the appropriate government agency or lending institution after you've completed the application form for the loan.Government loans are usually serviced by a particular bank or lending institution.The government agency that guarantees or protects the loan should not be handling your application paperwork.The completed paperwork should be sent to the address included in the application.You may be able to submit your application online if you complete it online.If you submit your application online, the bank or lending institution will give you an address where you can send any documents you don't have digital copies of.
Step 15: Adhere to your loan's terms and conditions.
A document outlining your responsibilities as a loan recipient will be provided by the bank that services your loan when it is approved.Financial reports or other information may be submitted on a regular basis.Make sure you read through the terms carefully and understand how your payments are structured.If the loan is for a specific purpose, you need to be able to prove that you are using the funds for that purpose.Through the life of your loan, you may be required to submit budgeting or financial reports.The contact information for the agent responsible for your loan is included in your packet.If you have difficulty making your loan payments, you should keep this information in a safe place with your financial records.If you contact them as soon as possible, they will be willing to work with you.