How to Finance Expansion of Your Family Farm
Financing your farm’s growth? Discover the best loans for buying land, equipment, and more—customized for local family farmers.
Family farm owners in southern Wisconsin and northern Illinois face plenty of risks. They’re buffeted by Mother Nature and trade frictions while getting squeezed between corporate farms and agricultural giants.
Whether you’re looking to grow your family farm, buy a farm, or improve your operation, there are government-backed farmer loans and commercial
farm and agricultural loans available.
Does a Family Farm Need a Business Plan?
Many lenders require a
business plan to apply for a loan, including the USDA’s Farm Service Agency (FSA). Even if a business plan isn’t required, it’s still worth thinking about your long-term plans for the family farm and the resources you’ll need to meet your goals.
These might include increasing your profit margins, running your farm more efficiently, switching to a new type of farming, or passing the family farm on to the next generation.
The USDA offers a
Business Plan Guide with information on starting a farm, putting together a farm business plan, and managing risk.
What Types of Commercial Ag Loans Are Available?
We specialize in all types of farm loans and have a long history of serving family farmers throughout Southern Wisconsin and northern Illinois. These are the types of agricultural loans we offer:
Working Capital Lines of Credit for Farms
A working capital line of credit, also known as a
working capital loan, is an ongoing loan option that you can tap into as needed to fund the typical operating costs of your farm.
Many of our customers use these to cover their short-term cash flow needs, such as the start of a planting season. A line of credit loan comes with much more favorable terms and lower interest rates than you would obtain with other options, such as a credit card or an unsecured line of credit.
Farming lines of credit are typically used for:
• Buying seeds and fertilizer at the start of a season.
• Pay for equipment repairs.
• Cover regular operating expenses, such as fuel and electricity.
Because a line of credit is backed by collateral, such as your land, buildings, and equipment, you can obtain a much better interest rate than an unsecured loan which doesn’t require collateral.
Term Loans for Equipment and Livestock
As a local bank, we understand the needs of our farming community and why they need loans to fund their operations.
A
term loan is paid back in monthly installments at a fixed interest rate. You can secure such a loan using whatever asset you’re purchasing, such as large equipment or a herd of livestock.
These loans are similar to auto financing loans; because once you pay off the loan you own the item entirely.
Our local farmers use these loans for needs such as:
• Buying feeder cattle and similar livestock to raise on your farm.
• Equipment replacement, so you can keep your farm operating efficiently.
• Buying new equipment: Whether you need a new tractor, combine, forage harvester, fertilizer spreader, etc.
To estimate your cost of purchasing or leasing equipment, check out our
purchase or lease equipment calculator.
Agricultural Real Estate Loans
Whether you’re buying out the family farm, expanding your fields, or starting your own farming operation, we understand the farmland real estate market in Wisconsin and Illinois. We can help you find the right farm loan to fit your needs.
Agricultural real estate loans are for buying and developing farmland. We also offer
farming construction loans, for building or rehabbing new or existing barns and other structures that you need for your farming operation.
Typical features of agricultural real estate loans:
• Mortgage terms range from five years or less; up to 20 years.
• Down payments ranging from 20% to 35% of your farming mortgage are typically required, depending on your credit rating and other factors.
• These loans are secured with a lien on your farming property.
To apply for a farming real estate loan, you’ll need the following documents:
• The income tax returns for your farm.
• Your books and financial records.
• Bank statements from the last three months or more.
• Information on your collateral.
• An independent appraisal of the property.
• Your business plan.
Farming Trust Services
Many of our farming customers have been working the same land for three generations or more, and they’d like to keep that tradition going. Of course, that’s not always so easy given the unpredictability of the weather, market conditions, and developers turning farmland into subdivisions and parking lots.
We understand and support your desire to have your children and grandchildren work the land, and we can help you accomplish this through a variety of trust services and trust experts in our branches throughout Southern Wisconsin and northern Illinois.
With a trust, you can designate a trustee to continue working the farm on behalf of the trust, while avoiding a lengthy and expensive probate process. It also allows you to transfer a farm privately, rather than doing so in court.
You can also give a trustee the power to make financial decisions on your behalf; if you’re unable to do so yourself.
Our farm trust services include:
• Revocable trusts
• Irrevocable Trusts
• Testamentary Trusts
• Charitable Trusts
• Special Needs Trusts
• Life Insurance Trusts
• Guardianships / Conservatorships
To learn more about farmland trusts and your options for establishing one, please reach out to our
trusted experts to help you.
Apply for Farm and Agricultural Loans with FNBT
We’ve been providing agricultural loans to farmers for more than 140 years, so we’re always here to help you. If you have any questions about ag loans and farm loans,
contact our business team or call
1.888.255.2114 to get started. You can also visit us at any of our
convenient locations in Southern Wisconsin and Northern Illinois. We have branches conveniently located in Beloit, Argyle, Clinton, Darien, Delavan, Janesville, Elkhorn, Monroe, Roscoe, Rockton, Williams Bay, Winnebago, and Walworth.