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Your Options for First Time Farmer Business Loans
First time farmers have plenty of business loan options available to buy land, take over existing farms, finance heavy equipment, and fund operating expenses. Financing programs are available from lenders, government programs, and other financial institutions.
The two most popular places for new farmers to get their first business loan include:
- The U.S. government through the Farm Service Agency (FSA).
- Small business lenders including traditional banks, credit unions, and alternative lenders.
U.S. government programs include direct loans where the government funds part of the loan and a small business lender funds the rest. Lenders often prefer this because there is less risk with government backing, and first time farmers enjoy rate caps and other controls that the government puts in place as protections.
When you can’t meet the eligibility requirements for government programs, there are other options available from small business lenders including traditional banks, credit unions, and alternative lenders like us. Each offers different types of business loans for first time and experienced farmers alike.
If you’re stuck trying to choose between a government-backed loan for new farmers or a loan for specific uses from a lender, we can help. Below you’ll find more information on the options available, how they work, and which types of financing may best meet your needs.
Government Loans
The U.S. government provides loans to first time farmers through the Farm Service Agency (FSA) and offers two types of loans:
- Direct funding from government money
- Government-guaranteed loans from traditional and alternative lenders
To qualify for an FSA-backed loan as a first time or beginning farmer, you have to meet these requirements:
- Have less than 10 years’ experience operating a ranch or farm.
- Don’t currently own a farm or ranch, or the one you own is smaller than 30 percent of the average farm size based on the most current Census for Agriculture.
- Meet eligibility requirements for the specific program you want to apply for. See below:
You must also “substantially participate” in the operation, meaning you can’t be a passive participant that collects a check and checks in from time to time. Plus, the government programs all stipulate that you must have been unable to get financing elsewhere, similar to SBA loans for small businesses.
If you already qualify for traditional business loans, then the FSA programs aren’t for you. With that said, if the loan you qualified for outside of the FSA loan isn’t affordable because of a high interest rate or terms that are too restrictive, you might still be able to qualify, as the available financing isn’t practical and could lead to failure.
When you do qualify for government loans, here’s what you can expect from traditional lenders, knowing each one will vary.
Direct Funding
The government provides direct funding for up-and-coming farmers who can’t get funding from other sources because they don’t have a solid credit history or enough collateral to secure the loan. The 3 types of loans the FSA makes available include:
- Ownership loans to purchase a farm or make major improvements to existing farms.
- Farm operating loans to fund operating costs.
- Microloans for smaller financing needs.
Farm Ownership Loans
Farm ownership loans from the FSA help first-time farmers buy land, buildings, and make major improvements like adding a new barn. They can also be used to make a down payment. You can find a list of uses here in their FAQs. Within farm ownership loans, there are two types called “joint financing loan” and “down payment loan.”
- Joint financing loans give you up to $600,000 from the FSA, based on the purchase price of the farm you’re buying. The FSA provides half the money, and the rest comes from a commercial lender or is financed by the seller of the property.
For example: If you’re buying a $2 million farm, the FSA would fund up to $600K, and the rest would come from elsewhere. But if you’re buying a small property for $930,400, then the FSA would fund 50% ($465,200) and the other half you’d get from a bank, credit union, or financing from the seller.
- Down payment loans are set up so that you have to put up 5% of the purchase price as a down payment. This is different from joint financing loans where the lender can require more.
The FSA then covers 45% of the purchase price and another lender covers the final 50%. The down payment loan also has a lower cap for what the FSA lends, which is equal to 45% times the lowest of the following:
- $667,000 (meaning the FSA would lend 45% * $667,000 = $300,150)
- The total purchase price of the farm
- The appraised value of the farm you’re buying
That means that the most the FSA lends with the down payment loan is $300,150. And the amount goes down when the purchase price or appraised value is less than $667,000.
Farm Operating Loans
FSA farm operating loans go up to $400,000 and can cover most purchases or needs including:
- Buying livestock.
- Purchasing farm equipment.
- Funding fuel needs.
- Stocking chemicals.
- Insuring the farm.
You can find the entire list here. Other operating costs like living expenses or debt refinancing are also covered, and repayment terms vary from one to seven years. Operating loans won’t cover purchases of land or farms/ranches though. And if you need more than $400K, then that’s where traditional and alternative lenders come in with agriculture business loans.
Microloans and Grants
The FSA offers microloans up to $50,000 that can be used for anything from down payments on a farm to marketing costs. There’s no minimum amount for microloans, and the repayment terms range from 12 months for general operating microloans to 25 years when the money goes toward farm ownership.
There are also grants available like the USDA Value Added Producer Grants where priority is given to beginning farmers and other groups like veterans. These allow you to access “free” money that doesn’t need to be paid back.
Government Guaranteed Loans
The government guarantees business loans for first-time farmers, so it’s easier to get approved by traditional and alternative lenders since their risk is lower due to that guarantee. The FSA isn’t giving you any money as these loans come from banks, credit unions, and alternative lenders, but they do select and evaluate which lenders are approved to finance beginner farmers.
FSA Guaranteed Farm Loans can go as high as $2,343,000 in 2026* (this amount changes each year based on inflation, so click here for the most recent amount). You’re able to use FSA Guaranteed Loans to purchase a farm, finance construction or to repair buildings and structures. It can also be used for land development and to cover operating expenses like feed, seed, and fuel.
There are special FSA Guaranteed Farm Loans including:
- EZ Guarantee program that works like microloans and can be as high as $100,000.
- Conservation loans used for preventing soil erosion, improving water usage, and other sustainable initiatives. Click here to learn more.
- The land contract guarantee program that is used for landowners to sell land to new farmers through a land contract. This protects the seller from the new farmer not making payments on the contract. Click here to learn more.
Traditional Financing
Traditional financing is the other popular way for new farmers to get business loans and financing. Funding can come from large banks, credit unions, and alternative lenders. These options move faster than government-backed farm loans, but don’t have the protections like government backing and may not have as many controls on terms like interest rates.
When you qualify for traditional financing from big banks, local credit unions, or alternative lenders, then you won’t qualify for government programs. This means if you have a good or great credit score or sufficient collateral to get a farm loan approved, then traditional small business loans are your best bet.
One benefit to using traditional and online lenders is that they can customize the financing solution around your needs. A few options include:
- Emergency business loans for damage and cleanup after natural disasters like floods, fires, and tornadoes.
- Farm equipment financing to buy or lease new and used equipment and machinery including vehicles, harvesters, sorters, and production equipment.
- Working capital loans for any operating expense from feed to fertilizer, utilities, and payroll.
If you’re in a hurry, online and alternative lenders like us can approve financing faster than a traditional large bank or credit union, but you may not get as much financing. Some have limits at $500,000 and others at $1,000,000. If you have time and need larger amounts of financing, a large bank may be the way to go, but you may also get stuck with more paperwork as there is more red tape, and possibly be required to go to a brand in person.
Traditional loans for new farmers are not backed by the FSA, so they will likely have higher interest rates than the government programs as there is more risk. But this is offset by faster approvals and payback periods, and potentially more flexible terms.
First-time farmers have plenty of options for their first business loan including direct government funding programs, government guaranteed loans via traditional and alternative lenders, and fast online funding from alternative lenders. If you’re curious about the options available, click here and apply for financing with us. You’ll get a fast response and will learn how we can help you with your new farm.
*As of January 2026
We do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal and accounting advisors.
