Investment loan, farm loan, consolidation loan – the choice of loans for farmers is very large. What possibilities do individual loans give and how to choose the best form of commitment?
Today’s agriculture and finance
Agriculture in the 21st century is not only hard work at high risk (about which later), but also expensive, specialized equipment. In fact, a farm today is a costly enterprise that requires efficient and effective management. And even despite the right decisions, the purchase of the best equipment and machinery, and high income (which are often seasonal), a farm may lose liquidity due to random accidents. You do not need much to do this – loss of crops due to early or late frosts, price drops on the market or a virus attacking pigs. All this can make the farmer face the need to take out a loan, which will depend on his further work.
Credit for farmers is not only a way out in a crisis, but also an excellent opportunity for farm development. Thanks to financial assistance from the bank, it becomes possible, for example, to modernize agricultural equipment, purchase agricultural land or create housing for animal husbandry. All this leads to an increase in the company’s profits – today you can easily call it farms. In addition, in some situations, farmers’ credit can be a way of meeting their current needs, such as buying feed.
Credit for farmers – how to choose the best offer?
Nobody needs to be convinced of the importance of agriculture in today’s economy – contrary to appearances, the industry also has a large flow of financial resources. It is not surprising then that banks present an extremely extensive offer of loans to farmers. There are various types of commitments to choose from. Much, of course, depends on the current financial situation of the borrower, his credit history and possible history with the Credit Information Bureau. Some loans may be unsecured, which simplifies and shortens all formalities.
Business loans are one of the types of loans available.
Funds obtained in this way can be used, for example, for the purchase and renovation of equipment or purchase of agricultural inputs. Investment loans, as the name implies, are used for broadly understood farm development. In practice, this boils down to, among others for the purchase and installation of solar farms or the purchase of agricultural machinery and equipment. At your disposal are also, for example, consolidation loans. This is a useful solution if you already have several commitments and you can’t deal with them on time. The bank will take over your loans and although it will extend their repayment period, it will also reduce the value of the monthly installment.
When reviewing the available loan options, in addition to the value of the liability, it is worth paying attention primarily to the interest rate, installment schedule and their amount. If you want to compare offers of several banks, the APRC, i.e. the Actual Annual Interest Rate, is a good reference. Farmers’ credit can be used for a variety of purposes, but the decision to get it must always be carefully considered.