Farmers are constantly searching for ways to improve their property and the farming operations, and the new generation of agricultural steel buildings provides some useful options. Not only are they easy to build and modify, but quick to construct and inexpensive to maintain. In addition, the non-combustible nature of the materials makes metal buildings a safer option for a farmer’s livestock – and livelihood – than traditional buildings. The critical question, however, is how do farmers obtain financing for agricultural metal buildings such as barns, storage facilities and even homes?
Farm Credit Options
Farm credit is available through a variety of lending institutions. From the traditional line of credit through a bank or credit union to financing the construction of a metal building using credit cards, commercial farmers have a number of options available. In some cases suppliers of steel buildings offer payment plans, and various government-run lending agencies also provide ways to fund these buildings. It’s a case of finding the right loan for the individual farmer’s circumstances and credit rating.
Lending institutions that offer financing specifically for agricultural buildings are aware of the value of metal construction and are very willing to consider loan applications for this purpose. Farmer Mac, the Federal Agricultural Mortgage Corporation, offers loans through a nationwide network of lenders. From standard mortgages through to long-term loans with fixed-rate funding, eligible borrowers can apply directly to Farmer Mac’s lenders for financing under the various programs offered.
Other national lending agencies such as the Farm Credit Network and Farm Credit work in a similar fashion, although as a network of cooperatives the System lends money generated by the sale of U.S. debt securities instead of relying on federal funding. The network is effectively owned by its customers and regularly distributes a percentage of annual profits to them, as one lender serving five states did recently to the tune of $10.2 million.
States frequently have their own farm credit programs, too. The Agricultural and Small Business Development Authority in Missouri, for example, offers eligible farmers up to $488,600 in loans that can be used for farm buildings. Farm credit lenders understand the cyclical nature of farming, and often specialize in lending for a particular type of farming. They may structure loan repayments monthly or perhaps annually, if the farmer’s income is generated by a specific event such as the harvest.
Getting a Quote
The first step towards finding farm credit for a metal building is determining what the final cost is likely to be. Farmers typically contact Armstrong Steel with the dimensions of the building that they need.
Applying for a Loan
In many cases, farmers can apply online to make the initial contact with a potential lender, while in smaller centers lenders may prefer to deal personally with their customers. As with any loan application, it’s wise to shop around and try to find the best interest rate. This varies depending on the lender, the type of farming and the purpose of the building. Farm Credit Mid America, for example, offers fixed-rate loans for up to 10 years for crop farmers.
And if a farmer isn’t eligible for commercial farm credit but still needs to construct a metal building, the USDA’s Farm Service Agency offers direct loans or loan guarantees of up to 95% to help farmers “bridge” the gap to commercial credit.