If you’re into commercial agriculture, taking a long-term agricultural loan can help you run your farm more efficiently. Running a farm can be difficult with all the costs associated with it. An agricultural loan can help you stay afloat.
Fortunately, reliable organizations exist to help farmers with low-interest loans and other subsidies to help them make a profit. In many cases, Cooperative banks often provide long-term loans for agriculture and industry. However, genuine lenders such as United Farm Mortgage also offer long-term agricultural loans to farmers.
Here are the main benefits of taking a long term agricultural loan:
Repaying old loans
You can repay any loan you take from other lenders or creditors at a high-interest rate using a long-term loan from a reliable lender. The procedure often varies from one lender to another, but generally, the process of borrowing is straightforward.
Buying new land
A long-term loan can also help you purchase a new piece of land, which you can utilize for agricultural production. You can also convert the land into an economic holding with a gradually increasing value compared to the expenditure.
In some cases, the new land is mortgaged to the lender until you repay the loan. Even so, you can repay the loan in agreed installments using the agricultural products you generate from your new land.
Buying agricultural machinery
A long-term agricultural loan can also help you acquire agricultural machinery to expand your scope of production. In this case, lenders often offer the loan against the hypothecation of the machinery, such as a tractor.
In this situation, you’re allowed to use the tractor while repaying the loan on an installment basis. Once you finish repaying the loan, the lender lifts the hypothecation of the machinery, and ownership is restored to you.
Improving small and minor agricultural projects
If you’re in a place where you could take up minor irrigation projects or drainage of excess water, you can team up with other farmers and take a long-term loan from a reliable lender. These loans work well for cooperative societies and other similar groups with a common goal.
Soil conservation and land reclamation
If you own land that is not suitable for cultivation, you can get a long-term loan to reclaim the land for better agricultural production. Soil conservation and land reclamation processes can take years to accomplish. They involve clearing rocks and boulders or controlling soil erosion. During this time, you can repay the loan in installments.
How to Obtain a Long Term Agricultural Loan
Most lenders provide long-term agricultural loans against the security of land. The repayment period is usually between 10 and 20 years. The borrower mortgages the land to the bank until the loan is repaid in full and ownership reverted to the borrower.
Once the borrower completes repaying the entire loan, the lender lifts the mortgage and the land ownership is transferred to the borrower. If the borrower fails to repay the entire loan as agreed, perhaps due to natural calamities or crop failure, the lender can reschedule the loan and extend the repayment period to 25 or 30 years.
At United Farm Mortgage, we offer long-term agricultural loans with up to 30 years repayment period. Contact unitedfarmmortgage.com to learn more about our products.