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Find your farm financing

The comprehensive guide to financing your new container farm.

Finding the right financing can be daunting–there are so many options, lenders, rates, and payment terms, how do you know which one is right for you?

Here at Freight Farms, we’ve worked with hundreds of farmers and have helped them navigate the murky waters of farm financing.

We’ve done the legwork for you.

This webpage is a compilation of our industry knowledge, hours of research, and several conversations with our lending partners. We compare small business, equipment and federal financing options, as well as grants, incentives, and business planning tools. Start your search for farm financing:

The USDA

If you are not able to get funding from private lenders, federal programs are a great back up plan. Specifically, the USDA Farm Service Agency is a funder of “last resort” for farmers. In particular, this is a great place for new farmers to find funding, since the FSA sets aside a portion of their annual funding budget specifically for beginner farmers.

At your local bank

This is a great place to start, especially if you have taken out a loan from your local bank previously. Some banks have created local beginner farmer financing initiatives, while others work with the Small Business Association or Aggie Bonds.

  • An Aggie Bond is the middle ground between private and federal financing. They are created at the state level through a federal-state partnership that allows private lenders to get federal or state tax-exempt interest on loans for beginner farmers to purchase farmland, equipment, buildings, and livestock. Aggie Bonds are beneficial to everyone: Farmers have access to interest rates around 1-3% lower than market rates. For the federal government, the loan’s liability is held by the private lender, meaning states can assist beginning farmers without tapping into federal funds or impacting debt limits. Currently, Aggie Bonds are available in sixteen states: get all the details and state specific resources here.

Online

There is a huge variety of financing available online through regional and national lenders. These typically give you a quick decision after you provide some basic credit and business information, offering loans from $5,000-$5,000,000. Many provide general business loans, but we’ve collected information on farming-focused options below as well.

 
 
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Comparing Farm Financing by Loan Type

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Jump to section:

Small Business Loans

These are the most plentiful loans out there, with hundreds available through local banks or online companies. Most require at least one year of business experience, and some have minimum revenue numbers they want to see before lending out money. In the table below, we’ve outlined just a few popular options for general small business loans. For farmers, your regional Farm Credit branch can provide favorable financing–they even have a special program for new farmers (Farmstart) designed specifically to help young or inexperienced farmers launch a business.

Common types of small business loans:

  • This can mean a short-term or long-term loan. A traditional short term loan is used to fund business opportunities. Short term loans typically last a few months to a year or more and are more accessible to small businesses compared to a long-term loan. By contrast, a long-term loan is used to finance lasting business investments (i.e. machinery, manufacturing plants, even another company), and can last 10-20 years.

  • A set sum of cash for a business to draw upon as needed. Companies can choose to pull money out for long-term investments or for short-term needs. Whatever a business takes out is paid back on a set schedule with interest.

  • This is your typical loan scenario, where the loan is paid back with equal monthly payments that cover the original sum (principal) and interest based on the interest rate you received upon signing. Installment loans can be used to fund any of your business needs.

  • A short term loan for the purpose of funding a company’s day-to-day operations during a time of reduced activity. When the lull is over and business is booming again, the company can repay the small business loan.

 
 
Loan
Amount		 Time in
Business		 Min.
Credit Score		 Repayment
Period		 APR
Lendio $1,000 -
$5,000,000		 12+ months 580 1-300 months 8-24%
Lending Tree $2,000 -
$1,000,000		 12+ months 0 3-180 months Varies based on credit score & loan type
Kabbage $2,000 -
$250,000		 12+ months 0 6-12 months Varies based on credit score
Farmstart by
Farm Credit East
Seed capital for new farmers		 Up to $75,000 Less than 3 years 0 Up to 60 months Wall Street Prime Rate + 2%

Equipment Financing

Equipment financing is an offering you can usually get from your small business lender. However, since the Freight Farms Greenery S is the building block for your business, you might be looking for just equipment financing. Below, we’ve outlined some favorable equipment financing options, including Freight Farms partner Farm Credit. A local bank or Aggie bond offerings would be another great way to find the capital to purchase you farming equipment.

  • Equipment loans are asset-based — lenders use your asset as collateral to back the loan. Once you pay off the loan, the equipment is yours. The benefits of an equipment loan are: low interest rates, outright ownership after paying out the loan, and a tax deduction on interest paid, as well as a depreciation tax benefit.

  • An equipment lease requires a monthly payment representing the cost of renting the equipment. Unlike loans, where monthly payments can fluctuate with changing interest rates, monthly lease payments always stay the same. At the end of the lease, you can purchase the equipment outright.

 
 

Private lenders

Loan
Amount		 Time in
Business		 Minimum
Credit Score		 Repayment
Period		 APR
National Funding Up to $150,000 6+ months 620 3-18 months Varies
Crest Capital Up to $1,000,000 2+ years 700 24-84 months Varies
Farm Credit Varies 1+ year 700 48-84 months Varies

Small Business Administration (SBA)

The Small Business Administration (SBA) works with lending partners to guarantee a portion of the loan instead of loaning directly. This reduces the risk for lenders, and allows business owners to obtain funds at competitive rates. SBA loans can help you find capital for purchasing equipment or operating your farm business.

  • 7(a) Loan finances working capital, expansion, equipment purchases. 85% of the loan is guaranteed by the SBA

  • 7(a) Express Loan has the same financing as the 7(a) loan, but only 50% of the loan is guaranteed. The upside is a faster loan application/implementation process.

  • Microloans finance working capital, inventory, equipment, and business startup expenses.

 
 

Small Business Administration Loans
Loan
Amount		 Time in
Business*		 Minimum
Credit Score*		 Repayment
Period		 APR
SBA 7(a) Loan Up to $5,000,000 2+ years 680 84-120 months 7.75-11.5%
SBA Express (7a) Loan Up to $350,000 2+ years 680 84-120 months 7.75-11.5%
SBA Microloan Up to $50,000 2+ years 680 72 months 6.5-9%
*These are general guidelines, but since the SBA partners with several lenders, these requirements can change from one lender to another.

Government Loans

If you’re having trouble getting funding from a private lender, you might qualify for a federal loan. As a general rule, loans from the USDA Farm Service Agency (FSA) are meant to be funding of “last resort”, meaning applicants were unable to get sufficient funds through a traditional commercial lender (like any we included above). A business plan and some agricultural experience are required to qualify for many USDA FSA loans.

  • A direct operating loan is used to purchase livestock and feed, farm equipment, fuel, farm chemicals, insurance, and family living expenses, make minor improvements or repairs to buildings and fencing, and general farm operating expenses.

    Funded directly by the FSA

  • Microloans are operating loans designed to meet the needs of small, beginning farmers, non-traditional, specialty crop, and niche operations by easing some requirements and offering less paperwork.

    Funded directly by the FSA

  • A guaranteed operating loan is made and serviced by commercial lenders (banks, credit unions, etc.) The FSA guarantees the lender’s loan up to 95 percent. EZ loans are for smaller amounts and include less paperwork/requirements, making them better for new farmers (same user base as microloans).

    Funded through a 3rd party, guaranteed by the FSA

 
Loan amount Experience in business
or farming 		Repayment
period		 APR
Farm operating - Direct Up to $400,000 3 out of past 10 years 84 months 4.75%
Farm ownership - Direct Up to $600,000 3 out of past 10 years 240-480 months 4.875%
Farm operating - Microloan Up to $50,000 3 out of past 10 years 84 months 4.75%
Farm ownership - Microloan Up to $50,000 3 out of past 10 years 300 months 4.875%

 More Farm Financing Resources

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Grants

For small businesses & producer groups:

FarmRaise

Who can join: Individual producers

FarmRaise is a digital platform that helps producers find the best funding options (be it loans, grants, or cost-sharing). A Funding Advisor is available to assist you and ensure you are prepared to apply.

Explore the interactive guide

Value Added Producer Grants (VAPG)

Who can apply: Individual producers, agricultural producer groups

This competitive grant program helps agricultural producers enter into value-added activities related to processing and marketing new products. The goals are to generate new products, create and expand marketing opportunities, and increase producer income. Priority may be given to beginner, socially-disadvantaged, small, or family farms. The grants are administered by the USDA Rural Development group. More information

Farmer’s Market Promotion Program

Who can apply: Agricultural businesses

FMPP grants are available to help direct-to-consumer outlets like farmers markets and roadside stands to develop, improve, and expand operations and to provide outreach, training, and technical assistance. These grants can be used for a variety of projects including market startup, infrastructure, training and education, market analysis and planning, and more. The grants are administered by the U.S. Departments of Agriculture's Agricultural Marketing Service (AMS). More information

For schools, non-profits & organizations:

Sustainable Agriculture Research & Education (SARE)

Who can apply: Researchers, extension agents, educators, and graduate students

These are competitive grants to fund research and education projects that advance sustainable agricultural practices in the United States. SARE grants are intended for projects involving research and education only, not to reduce the costs associated with starting a farm. A small percentage of SARE funding may be used to purchase the materials, but generally SARE funding cannot be used to make large purchases for land, equipment or capital investment. More Information

 

Farmer’s Market & Local Food Promotion Program (FMLFPP)

Who can apply: Agricultural cooperatives, producer and associations, community supported agriculture (CSA) networks and associations, local governments, nonprofits, public benefit and economic development corporations, food councils, regional farmers market authorities, and tribal governments.

The purpose of this competitive grant is to help the development, improvement, or expansion of farmers markets, CSAs, roadside stands, agritourism, other forms of direct marketing, and/or local and regional food business enterprises. These grants are administered by the U.S. Departments of Agriculture's Agricultureal Marketing Service (AMS). It has two subgroups–the Farmers Market Promotion Program (FMPP) and the Local Food Promotion Program (LFPP)–which issue separate Requests for Applications (RFAs) every year.) More Information

Farm to School Grants

Who can apply: Pre-K-12 schools, nonprofits, state and local agencies, agricultural producers, and American Indian tribal organizations.

These competitive grants are meant to help increase local food procurement for school meal programs and to expand educational activities on agriculture and food. There are three types of grants–planning, implementation, and support–which can be used for training and technical assistance, planning, purchasing equipment, developing school gardens, developing partnerships, and implementing farm to school programs. They are administered by the USDA and the Food and Nutrition Service (FNS). More Information

 

Community Food Project Grant

Who can apply: Nonprofits, tribal organizations, and food program service providers

The grant is a one-time infusion of federal assistance for projects that increase food distribution, participation in federally assisted nutrition programs, or improve access to food in low-income communities in order to increase self-sufficiency and food security. The grant is administered by the USDA and Food and Nutrition Service (FNS). More Information

Specialty Crop Block Grant Program (SCBGP)

Who can apply: State department of agriculture.

The purpose of the SCBGP is to enhance the competitiveness of specialty crops, defined as fruits, vegetables, tree nuts, dried fruits, horticulture, and nursery crops including floriculture. The grant includes marketing, training, food safety, and pest/disease management for specialty crops. Projects should be sustainable and have a measurable impact. These grants are administered through individual State Agriculture Departments. More Information

Incentives

Farming Incentives:

Solar power

The Federal government offers a Federal Solar Tax Credit, allowing you to deduct 30% of the cost of your Solar Electric System and installation from your federal tax bill. You can combine the federal tax credit with a solar rebates offered in your state.

Check out your state solar incentives

Property Taxes

Most states have preferential tax treatment for agricultural land, which usually involves reducing the tax burden of the property to reflect its current use, versus the market value. Qualifications can be based on land acreage, or on annual income from the farmed land. Check out your state tax treatment of agricultural land

Income Taxes

The Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment financed and their first year operating costs. With this code, you can fully depreciate your equipment in one year, instead of over the lifetime of the equipment, which can help save you money. To take advantage of Section 179, you need to purchase your equipment and have it in service by the end of the 2019 calendar year. Calculate your savings

Your Next Steps:

The first step to finding your funds is research. Reading this webpage should give you a good sense of the general landscape, but we can’t give you details on the specifics of your local bank offerings, or state-specific incentives. Spend some time talking and emailing with professionals to get the full picture.

One thing to keep in mind: even if you don’t have income or operating data from your new farm business, most banks will be able to give you a loan based on previous business experience, as long as you file for funding under an existing business ID. Freight Farms has contacts with individuals at National Funding, CIT Direct Capital, and Farm Credit East who can all consult you on the best approach to get the funds you need!

Your Business Planning Tools:

  • This interactive tools lets you toggle the four inputs that have the greatest effect on your bottom line: crop type, price per unit, electricity rate, and wages (if you hire additional farm labor).

    View Monthly Revenue Calculator

  • Use our robust business planning tool see your yields, profits, and expenses for up to four crops at once. Use local data to adjust sale and electricity prices for the most accurate profit data. Additionally, input all farm and business expenses, including costs of labor, rent, delivery, and packaging.

    Download Business Planning Tool

  • Once you have used the calculator and business planning tool to determine how to structure your business, it's time to organize everything into a comprehensive business plan to show financiers, potential customers, or local government officials.

    View Business Presentation Template

  • As you start a Freight Farms project in your community,

    you might be wondering who to sell to, which crops to grow, and what prices to set. This guide explores the three most successful customer segments for Freight Farmers: restaurants, direct-to-consumer, and grocery stores.

    Read Our Customer Guide

  • From one-time to recurring costs, here are all the details, visit Freight Farms pricing to learn more

 

The Freight Farms team can be your best resource

✓ Get more information on how to finance your farm

✓ Get in touch with our contacts at CIT Direct Capital, Farm Credit East, or National Funding

✓ Learn more about our business planning tools

✓ Learn more about the Freight Farms Greenery S

… and more!

 

Contact our expert business development team