Farm Equipment Financing

Farms need a lot of equipment to run efficiently and make a profit, but that machinery can cost hundreds of thousands of dollars. You probably don’t have that much cash handy to put down. Even if you do, you most likely need the money for other expenses that come with running a farm.

farm equipment financing helps spread out the cost of new machinery- AYF

That’s where farm equipment financing comes in. These types of loans allow you to purchase the tools and machinery you need while maintaining your cash flow to keep your farm running smoothly. Whether you need to buy large or small scale farm equipment, financing can help you break down the costs into more manageable pieces. Learn the ins and outs of farm equipment financing so you can make the right choice for your farm.

Who can use farm credit for equipment?

Most agricultural businesses could use farm credit to purchase equipment, including farms, ranches, dairies, and other livestock operations. Farm credit loans can enable you to finance the equipment you need to run your agricultural business successfully. Often, farms purchase and use new equipment all at once, so they tend to wear out around the same time. This can mean significant upfront costs every few years to keep operations running seamlessly. That’s the #1 reason why many farmers look for “farm credit near me.” Using farm credit to finance new equipment can boost your production rates and profits while keeping the costs manageable.

What interest rates can you get on farm credit for equipment?

Farm credit interest rates for equipment financing are some of the cheapest rates on the market. They range from about 8% – 30% depending on the lender and your farm’s business profile. Since the equipment you are buying becomes the collateral for the loan, there is less risk for the lender so they can offer lower rates. However, if you are looking for farm loans with bad credit, you can expect to see rates as high as 110%. This is because there is more risk for the lender. If you want to access better farm credit rates, it may be worthwhile to improve your credit score before applying.

farm equipment financing helps you buy the machinery you need with manageable payments- AYF

Do I qualify for farm equipment loans?

Financing for farm equipment is generally easy to get if you’ve been farming for a while and can prove you have some kinds of sales, whether it’s animals or crops. Here’s a list of basic requirements for most lenders:

  • 600+ FICO credit score 
  • In business at least 1 year
  • At least $100,000 annual revenue
  • Not declared bankruptcy in the last 5 years
  • A down payment of at least 10% of the equipment cost

Most lenders will also require the following documents:

  • Application form
  • 3 Months of Business Bank Statements
  • Equipment Information (Year, Make, VIN, Miles)

Tractor Financing for Bad Credit

Most farms rely heavily on tractors from planting to harvesting and every season in between, so it’s probably one of the most important pieces of farm equipment you’ll buy.

Some farmers worry that a bad credit score can stand in the way of financing the tractor they need, so they look for no credit check farm tractor financing. These loans are tough to find, but many lenders offer tractor financing for bad credit as an alternative. Although lenders typically require a minimum credit score of 600 for tractor financing, some accept applicants with scores of 520+.

It’s important to remember that lenders will offer you much higher tractor financing rates if you have bad credit. You may also need to lay down a larger down payment (sometimes up to 50% of the total cost) or agree to shorter repayment terms to balance the risks for the lender.

Used Tractor Financing

If the payments for a brand new tractor or other agricultural machinery are too expensive, you might consider used tractor financing instead. Farming equipment is built to be durable and often has a lifespan of 30+ years. Therefore, buying a used tractor is still an excellent investment. Used farm equipment financing can save you up to 50%, especially if the equipment you’re buying is more than 10 years old. Used tractor financing rates will vary depending on your lender, the age and price of the vehicle, your credit score, and how long you’ve been in business.

choose the farm credit option that works best for your business- AYF

Other Types of Farm Equipment Loans

Still not convinced that farm equipment financing is right for you? There are other credit options for purchasing agricultural machinery.

  • USDA Loans – These government-backed loans give farmers excellent rates and repayment terms on credit so they can grow their agricultural businesses. You can use these loans to purchase farming equipment, but you’ll have to meet their strict agricultural lending guidelines. For example, the USDA only funds loans to businesses operating in rural towns with under 50,000 people. These loans have a rigorous application process and can take a long time to receive a final decision. You’ll also need excellent credit to qualify. 
  • Farm Equipment Leasing – Instead of borrowing money to purchase farming equipment, leasing allows you to rent the machinery you need for a monthly fee. A significant advantage of leasing is that it is not a loan so that you won’t need to lay down a down payment. However, unlike farm equipment financing, you won’t own the equipment at the end of your lease. Some leasing companies give you the option to purchase the equipment for an additional fee at the end of your contract. Leasing is a good option if you know you can’t afford a downpayment, or you know you’ll want to upgrade or replace your equipment more often.

Farm Equipment Financing FAQ’s

What are the general farm equipment loan terms?

Terms for farm equipment loans generally range from 3-7 years, depending on your lender, credit score, and equipment price.

What can I buy with an agriculture machinery loan?

You can use this type of financing to purchase any sort of farming equipment you need. Common types of machinery that farmers purchase include:

  • Milling machinery
  • Precision tools, grinders, and cutters
  • Farm tractors
  • Front-end loaders
  • Field harvesters
  • Tillage equipment
  • Seeders, cultivators, chutes
  • Hay and forage equipment
  • Business and operations equipment

How much can I borrow with farm equipment financing?

Depending on your lender and your business profile, you can usually borrow between $20,000 and $1,000,000 in farm equipment financing.

Can I get a tax break for purchasing new farming equipment?

Yes! The Section 179 tax deduction allows farmers to deduct the cost of new or used farm equipment from their taxes. Learn more here!

Who is mCashAdvance?

mCashAdvance is an MCA direct funder based in New York. We provide fast cash injections to help American businesses thrive. If you process your sales through card transactions, you can get approved for a cash advance with us as an alternative to farm equipment financing.

  1. No collateral – You won’t need to use the farming equipment you want to purchase as collateral for the finance.
  2. Less paperwork – We don’t require any information about the machinery you buy. We only care about how your business is performing.
  3. No downpayment – We won’t ask you to lay down any money for a downpayment.

Our MCA funding is not the cheapest, but it always comes with complete transparency and integrity. Apply now with mCashAdvance and get an instant pre-qualification decision! If approved, we can advance your business up to $500,000 within 24 hours!

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