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Aspects to be Considered While Accessing Agricultural Loans

Many a time farmers find themselves in an urgent need of accessing the required loans to pursue their agricultural operations without any hindrance. Nowadays, accessing financial assistance at short notice for farming activities under unforeseen circumstances is quite common. There may be several reasons why farmers are in need of an agricultural loan – it could be that they may need to purchase a farm equipment to enhance the quality of farming operations and anticipate an increase in farm output.

Irrespective of the nature of their requirement in accessing a farm loan, getting the agricultural loan rely solely on the farmers’ credit history. If you hold a positive credit history, without having any overdue, then you can be sure of getting the loan quickly at a reasonable interest rate. On the contrary, a track record of poor credit history might end up in your chances of accessing the farm loan more hard and you will are likely to be charged with an enhanced rate of interest. However, accessing a secure loan will ensure you a lower interest rate, but will be cumbersome and involve a highly difficult process.

If you need a farm loan, then you are required to think of a few aspects, prior to accessing y the loan. The various aspects to be taken into account are:

Prepare detailed Business Plan:

If you are an existing or a new farmer who wish to apply for farm loans, the initial exercise is to get ready a comprehensive business plan that can reveal the requirements of cash flow for the various agricultural operations. Such a cash flow projection will enable your lender to comprehend the volume of loan you need and you’re repaying capacity.

Compare various terms:

There exist many money lending Institutions that arrange for farm l loans and each agency has its own interest rates and limit on the amount of loan. Hence, it is a good idea to make a comparison of the various institutions offering loan on aspects such as the their lending terms, amount of sanction, schedule of repayment , interest rates etc, before applying for the loan.

State Agricultural Finance schemes:

There are many state agricultural finance schemes that enable the farmers to avail farm loans on various reasoned like short-term farm loans, disaster relief loans, loans for livestock, farm implements loans etc. The advantage of accessing such loans is that it is a government sponsored loan scheme with flexible repayments options and reasonable rate of interest.

In case you find it difficult to access the farm loan due to some reasons or are not very much concerned about the enhanced interest rates, accessing the commercial loans is another means to fulfill your needs. This will enable you to realize a good loan amount and make use of to meet the farming requirements. These commercial loans provide for customized long term repayment schedules so that you are able to concentrate on your farming activities instead of worrying over the immediate repayment of loan. These types of loans, if availed from a well recognized lender will ensure stability and involves low risk factor, due to the fact that these types of loans do not involve any payment penalties.

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