Not all of us were built for farming regularly and turning it into a living. With that said, you can still enjoy harvesting your own crops as a hobby and make a little extra money on the side while doing so. Although your farm can start or be intended as just a hobby farm, there are several ways to get the financing you need to buy a farm land where you can enjoy a little bit of farm life away from the city, such as a cattle farm loans, bank and credit union loans, USDA loans, and private lenders like United Farm Mortgage.
If you are looking for a new hobby that will get your mind off work and other things that may cause a lot of stress, hobby farming might be it. However, farming is not a very cheap hobby, especially if you don’t have the land yet. In farming, you will need a few things; farm land, farming equipment, crops to plant, cattle, poultry, and more. These things can cost you a big deal of money, but because of their agencies and private lenders who can help you—money isn’t something you should worry about as long as you are committed to your plans and passion for hobby farming. In addition, your hobby might even be your main source of income someday!
Here are 4 ways to get financing for your hobby farm:
Farm Credit System
The farm credit system is an entire network of all agricultural lenders in the United States. These lenders finance anything from farm lands, cattle farm loans, equipment, and all your agricultural needs. They have been aiding many farmers for over a century. Even if you are just planning on establishing a hobby farm for your personal interests—you might be eligible for a farm credit loan.
To become eligible for these loans, you must be engaged and committed to farming and other ranching activities. Not all hobby farmers are eligible for a farm credit loan, so to be eligible, you will need to draw out a plan that will convince the system that your plans are worth financing and that you can pay them back with interest. The farm credit system offers various loan products, such as production loans, lines of credit for emergency spending and equipment, and term loans for much bigger purchases.
Bank or Credit Union Loans
Many individuals go to banks and credit unions when financing a house or a car. But did you know that you can also get financing for your hobby farm from specific banks and credit unions? These institutions have specific agricultural and farm land loan programs that can help you get the financing you need to buy farm land and start your own hobby farm.
Banks and credit unions are good options for getting the financing you need if you plan on turning your hobby farm into a money-making business. Plus, they know the lending system very well and know what farmers need to start and operate a fully functional farm.
However, there are a few things you should know or may already know about banks and credit unions. You must provide detailed information about your farm, what you want to produce, farming history, and plans for your farm. For hobby farms, banks and credit unions might not be the best options, especially if you don’t have a solid plan to prove you can pay them back with interest.
Many people already have an established relationship with banks and credit unions because of prior financing for their homes, cars, and other loans. But if this is your first time going to a bank for a loan, you can start by contacting your local agricultural lender. They can refer you to a bank or credit union specializing in farm land loans and other agricultural loans.
If you plan to speak with a bank or credit union about your financing, ask them about fees, interest rates, penalties, and other hidden loan terms. Also, note that these institutions are quite strict and have higher interest rates than other options.
USDA Loans
The USDA Rural Development Program offers a variety of loans and grants for local farmers and other rural businesses, including farm land loans and farming equipment loans for hobby farms. The entire program is designed to help all farmers and ranchers in the United States who do not have access to credit scores and other traditional financing sources.
However, the qualifications for this type of loan are stringent. First, you must purchase a lot in a rural area in the United States with a population of fewer than 50,000 people—followed by other terms that might not be for every hobby farmer. Aside from USDA loans, they also have programs that can guarantee loans from other commercial lenders.
United Farm Mortgage
Although many financial institutions can help you get the money you need to start your hobby farm, most are aimed at farms that will eventually need to make money to pay them back in the future. That is not the case for United Farm Mortgage’s farm program.
United Farm Mortgage sees farms just like any other hobby. Even without a solid plan that your farm will eventually make money in the future, all you need is to show them proof that you can pay the loan—which is more similar to buying a car or any other items you buy on your credit card. If you have a job and other sources of income that are not connected to your farm, you can still be eligible for a hobby farm loan from United Farm Mortgage. Being in the business for over 35 years, this private lender has helped many hobby farmers over the years.
The bottom line is that the best option for hobby farmers who just one to start their farm as quickly as possible is to choose a private lender like United Farm Mortgage.
References:
https://unitedfarmmortgage.com
https://modernterra.com/blog/3-ways-to-start-hobby-farming
https://c2financialhomeloans.com/financing-hobby-farm/
https://www.fsa.usda.gov/programs-and-services/farm-loan-programs/index
