Agricultural financing is rarely simple. Farming income is seasonal. Weather and input costs constantly change.
Agri loans are important as they support expansion, equipment purchases, and working capital. But delays often come from preventable issues, including incomplete financial documentation or repayment terms that do not match the farm’s cash cycle.
Here are 5 common mistakes and how to avoid them
- Incomplete or inconsistent financial information
Lenders require current, and organized financials to evaluate repayment capacity.
To address this expectation:
- Obtain and submit year-end financials and interim results as soon as possible
- Include balance sheet, income statement, and projected cash flow
- Consult accountants with agri sector experience to ensure the financial reporting is accurate
- Ignoring seasonal repayment alignment
Standard monthly payment terms may be impossible if payment schedules do not reflect crop or livestock income timelines.
To address this issue:
- Share operating calendars and harvest periods during loan discussions
- Request loan terms permitting interest-only periods or seasonal loan payments
- Confirm that projections align to your operational cycle
- Limiting options to traditional bank credit
Conventional lenders may apply rigid lending standards or terms that are inconsistent with farm client needs.
To address this issue:
- Consider engaging with private lenders that are willing to consider broader ranges of collateral and offer faster response times
- Seek credit providers familiar with agri lending, and rural asset classes
- Confirm terms, approval process, and reporting requirements in advance
- Overestimating collateral value or mismatching assets
All lending is subject to defined LTV parameters and acceptable collateral. Overvalued land or equipment can reduce advance rates or impede approvals.
To address this issue:
- Request independent appraisals
- Understand which assets your lender accepts and how they are discounted
- Document ownership, registration, and title status
How Union Lending Corporation structures agricultural credit
Union Lending Corporation supports agricultural borrowers by:
- Providing loans starting at $400,000 in size
- Aligning repayment terms to seasonal projections and cash flow
- Reviewing collateral across land, equipment, and other assets
- Offering integrated advice on lending, insurance, tax, and succession planning
Where appropriate, our team works alongside your existing advisors to structure the request, confirm security, and align repayment terms to your seasonal cash cycle. We then present the file across our network of lenders to identify the lenders best suited to fund the loan. Once documentation is complete, credit decisions are typically made within days, with funding timelines driven primarily by the speed at which we receive the required information from the borrower.
FAQs
What documents should I prepare for an agricultural loan?
Current financials, land/equipment appraisals, tax returns, and projected cash flows.
What if most collateral is livestock, inventory or equipment?
Loan eligibility depends on the willingness of our lenders to accept livestock, inventory, or equipment as security.
How do private lenders differ from banks?
Private lenders may offer faster approvals, broader collateral acceptance, and terms better aligned to farmers.
If you are reviewing farm financing options, we can help assess structures aligned to asset mix and seasonal cash flow. Contact us to discuss your financing requirements.