Wednesday, February 25, 2015

How To Get Farm Loans

By Earlene McGee


Due to the revolution in the industrial and farming sectors, many people now lives in urban cities where they are not able to produce their own food. This has created an opportunity for large scale commercialised farming. This type of activity is expensive and some farmers may not have the finances to invest in it. However, they can seek financing from institutions. Here is some general advice on farm loans.

There are different farming projects that can be done. The size of the project will determine the money needed to undertake it. Finding a market for the produce to be grown is important. The prices should also ensure profitability.

One can decide to venture in keeping farm animals for meat or milk. Keeping animals will not be an easy task and will need patience and close monitoring. The animals can fall sick and will require a lot of inputs in form of food and medicine. It may take some time before returns are realised. In such a case it may be better to seek for a long term loan. This will allow the farmer time to breed his animals before he can realise profits and start repaying the loan.

On the other hand, farmers who decide to venture in crop farming may seek shorter term loans. Some crops are seasonal with harvesting being done after some few months. This allows farmers to start earning money from their projects soon and thus they are able to make repayments sooner. Some farming ventures however take longer than a few years. Tree farming will take a couple of years and the financiers should allow adequate time for repayment.

There are many financiers available today. Many financial institutions have come up and competition has helped to make loans more accessible and even cheaper. It is still important to do some research on the terms and conditions attached to different packages from different loaners. The interest being charged should not be ignored as it will determine how much money will be paid back in full. Any other charges attached to the loan should be checked too.

The period over which a loan is to be repaid is important too. When the repayment is done over a very long period of time, the total amount of money repaid will be a lot. If repayment is done within a shorter period, less money will be paid. However, the period should be one that the farmer is comfortable with.

There are government bodies which finance farmers. These bodies target farmers who cannot access finances in the private financial institutions. Their interest rates may be cheaper. Due to the good terms of the loans, they have conditions which ensure that the poor farmers are able to benefit from the finances without being outdone by richer farmers. Farmers should consider this too.

The above points help farmers to learn about the types of loans they need. They also give tips on how to reduce the cost of a loan. They are helpful for first time farmers.




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