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Writer | Small business, business banking, business loans
Randa Kriss is a small-business writer who joined NerdWallet in 2020. She previously worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona College.
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Farm equipment financing is available from a range of sources, including government agencies and lenders that specialize in agriculture. Farm equipment loans can be used to buy new and used machinery, vehicles and other equipment that’s necessary for your operations.
The best farm equipment financing is the most affordable small-business loan you can qualify for that meets your needs.
250+ small-business products reviewed and rated by our team of experts.
95+ years of combined experience covering small business and personal finance.
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
These Farm Service Agency loans offer low interest rates and repayment terms up to seven years.
FSA Direct Operating Loan
Max Loan Amount
$400,000
Min. credit score
Undisclosed
Est. APR
5.25-5.25%
The Farm Service Agency issues direct operating loans to established farmers who need to fund everyday expenses, equipment or machinery purchases and minor building improvements.
Pros
Low interest rates.
Can be used for a variety of farming purposes.
No down payment required.
Borrowers with credit challenges may still qualify.
Cons
Must be an established farm; borrower must have relevant farming experience.
Document-heavy application process.
Slow to fund.
Qualifications:
Be an eligible farm enterprise.
Have an acceptable credit history (thin or no credit doesn’t necessarily disqualify).
Be unable to obtain sufficient credit elsewhere.
Have sufficient managerial ability in the farming industry.
Max loan
$400,000
Min. Credit score
Undisclosed
Apr range
5.25-5.25%
The Farm Service Agency issues direct operating loans to established farmers who need to fund everyday expenses, equipment or machinery purchases and minor building improvements.
Pros
Low interest rates.
Can be used for a variety of farming purposes.
No down payment required.
Borrowers with credit challenges may still qualify.
Cons
Must be an established farm; borrower must have relevant farming experience.
Document-heavy application process.
Slow to fund.
Qualifications
Be an eligible farm enterprise.
Have an acceptable credit history (thin or no credit doesn’t necessarily disqualify).
Be unable to obtain sufficient credit elsewhere.
Have sufficient managerial ability in the farming industry.
Our pick for
Flexible farm equipment financing
AgDirect specializes in equipment financing for farms and other agricultural businesses. You can buy or lease farm equipment from a dealership, as well as buy or refinance equipment from an auction or private party.
AgDirect Farm Equipment Financing
Max Loan Amount
Undisclosed
Min. credit score
Undisclosed
Est. APR
6.95-8.75%
Offered by Farm Credit Services of America and participating Farm Credit System Institutions, AgDirect provides flexible and low-interest equipment financing for farmers and agricultural businesses.
Pros
Can finance or lease a wide range of new or used farm equipment.
Low interest rates.
Flexible payment schedules available (e.g. annually, semiannually).
Approvals in as little as three business hours.
Cons
May require up to 30% down payment.
Qualification requirements not disclosed online.
Qualifications:
Be an eligible agricultural producer or farm-related service business.
AgDirect does not disclose specific qualification requirements on its website.
Max loan
Undisclosed
Min. Credit score
Undisclosed
Apr range
6.95-8.75%
Offered by Farm Credit Services of America and participating Farm Credit System Institutions, AgDirect provides flexible and low-interest equipment financing for farmers and agricultural businesses.
Pros
Can finance or lease a wide range of new or used farm equipment.
Low interest rates.
Flexible payment schedules available (e.g. annually, semiannually).
Approvals in as little as three business hours.
Cons
May require up to 30% down payment.
Qualification requirements not disclosed online.
Qualifications
Be an eligible agricultural producer or farm-related service business.
AgDirect does not disclose specific qualification requirements on its website.
Our pick for
Farm equipment financing for bad credit
You may be able to qualify for a farm equipment loan from Triton Capital with a minimum credit score of 575.
U.S. Bank can offer up to 125% in farm equipment financing — including soft costs, such as freight, warranties and taxes. You’ll need at least two years in business to qualify.
U.S. Bank Equipment Financing
Max Loan Amount
$1,000,000
Min. credit score
Undisclosed
U.S. Bank can provide up to 125% in equipment financing (including soft costs), with no down payment required.
Pros
Offers up to 25% in additional financing to cover soft costs, such as installation, taxes and freight.
No down payment or blanket lien required.
Option to finance multiple pieces of equipment on one contract.
Cons
Can only apply online for transactions under $250,000.
Interest rates and qualification requirements not disclosed online.
Qualifications:
Minimum credit score: Undisclosed.
Minimum time in business: Two years.
Minimum annual revenue: Undisclosed.
Max loan
$1,000,000
Min. Credit score
Undisclosed
U.S. Bank can provide up to 125% in equipment financing (including soft costs), with no down payment required.
Pros
Offers up to 25% in additional financing to cover soft costs, such as installation, taxes and freight.
No down payment or blanket lien required.
Option to finance multiple pieces of equipment on one contract.
Cons
Can only apply online for transactions under $250,000.
Interest rates and qualification requirements not disclosed online.
Qualifications
Minimum credit score: Undisclosed.
Minimum time in business: Two years.
Minimum annual revenue: Undisclosed.
How Much Do You Need?
4.5 Excellent
4.5 Excellent
What is a farm equipment loan?
A farm equipment loan is a loan that’s specifically used to purchase equipment for a farm or similar agricultural business. Depending on your lender, you may be able to buy new or used equipment, such as tractors, combines, harvesters, planters, dump trucks and utility vehicles, among other options.
Like other types of equipment financing, farm equipment loans typically use the machinery you purchase as collateral on the loan.
How does farm equipment financing work?
Farm equipment loans are usually structured as business term loans. You borrow a lump sum of capital from a lender and repay it, with interest, over a specific period of time.
Repayment terms on farm equipment loans can range from one to 10 years, depending on the type of equipment you’re purchasing. Terms are typically based on the projected useful life of the equipment. Payments are often made on a monthly basis, although some lenders offer flexible payment schedules (e.g., annually, semi-annually or quarterly).
Farm equipment loan rates can range from 5% to 15% from government, bank and direct lenders. Online lenders may have higher interest rates. The rate you’ll ultimately receive, however, will depend on your business’s qualifications, your down payment and the value of the equipment you’re buying.
Where to get farm equipment financing
Farm Service Agency
Backed by the U.S. Department of Agriculture, the FSA offers several types of farm loans. These loans have low interest rates and long repayment terms.
These loans can be used to fund a variety of farm-related operating costs, including the purchase of equipment and machinery. You can get loans up to $400,000 with repayment terms up to seven years. Interest rates are set monthly by the FSA.
Farm operating microloans are designed to accommodate new and small farms as well as niche and nontraditional farm operations, such as truck farms, farms that participate in direct marketing (e.g., farmers markets) and Community Supported Agriculture operations (CSAs).
These microloans can be used to buy different types of equipment — with a maximum loan amount of $50,000. Repayment term maximums and interest rates mirror those of the standard direct operating loans.
The FSA offers Native American tribal loans, emergency loans and youth loans. Repayment terms, interest rates, use cases and eligibility requirements vary based on the program.
In addition to its standard operating loans, the FSA administers a loan guarantee program — similar to the SBA loan program. These loans are issued by commercial lenders, such as banks and credit unions. The FSA guarantees up to 90% of the loan (95% in limited cases). The rates and terms on these loans are negotiated between the borrower and the lender, subject to FSA maximums.
In general, you’ll need to meet agricultural-specific requirements to access FSA equipment financing. You must be able to show your managerial experience, eligible loan purpose and ability to repay the funding.
You should also have an acceptable credit history, although the FSA does not use credit scores. The agency will not automatically reject applicants for no credit history or isolated incidents of slow payments.
To apply for one of these government equipment loans, you need to fill out a lengthy and detailed application. Once you send a finished application to the FSA, it can take up to 60 days to receive approval and funding.
The FSA recommends reaching out to your local office or USDA Service Center for assistance on completing and submitting a loan application. These organizations can also help connect you with a local lender if you’re interested in a guaranteed loan.
Although the Small Business Administration recommends that farmers start their financing search with the FSA, you can use SBA 7(a) and 504 loans for farm equipment purchases. Both types of loans can offer low interest rates, long repayment terms and a government guarantee from the SBA.
SBA 7(a) loans are available in amounts up to $5 million with interest rates ranging from 11.5% to 15%. Repayment terms for equipment purchases are available for up to 10 years. The SBA will guarantee up to 85% of the funding amount for loans up to $150,000 and 75% for loans greater than $150,000.
Similarly, SBA 504 loans are available in amounts up to $5.5 million with repayment terms up to 10 years for equipment. Unlike 7(a) loans, these loans come from three places: a Certified Development Company (CDC), a bank or credit union, and the borrower. Although most SBA 504 loans require a 10% down payment, farms are considered a “special purpose property,” which means you’ll have to put down a minimum of 15% of the funding amount.
Interest rates on 504 loans are tied to the five- and 10-year U.S. Treasury notes, and the SBA offers a 100% guarantee on the CDC portion of the loan. These SBA loans also require that your business meet a job and retention requirement, so they may be more difficult to qualify for than the standard 7(a) loan.
You’ll need good credit, multiple years in business and strong financials to qualify for a 7(a) or 504 loan. These SBA loans can be a good option for established farmers, especially if you have a previous relationship with an SBA lender.
Online equipment lenders
If you need farm equipment financing fast — or you can’t qualify for a government loan — online lenders may be a good option. These lenders typically offer streamlined applications with minimal documentation and may be able to provide funding in a few business days.
Online lenders tend to have more flexible qualification requirements than traditional lenders, and some may be willing to work with startups or businesses with bad credit. In exchange for this speed and flexibility, however, you’ll usually pay higher interest rates on your funding.
Specialty farm equipment lenders
Some lenders specialize in the agriculture industry and offer direct funding to farmers. These companies tend to provide a wide range of loan options as well as their knowledge and expertise to the financing process.
Although qualification requirements and loan details can vary from lender to lender, these companies can help farmers who may not be sure what type of funding they need as well as any borrower who prefers a more personalized experience.
As an example, Farm Credit is a network of customer-owned financial institutions that provide loans and financial services to farmers and other agribusinesses. Through this program, lenders across the nation can offer access to business capital and help farmers find the right financing for their needs. To find a Farm Credit institution in your state, you can use the search function on the network's website.
One of the best-known Farm Credit programs is AgDirect, an equipment financing program offered by several Farm Credit institutions. AgDirect allows you to finance and lease new and used farm equipment. You also have the option to buy or lease equipment from a dealership as well as buy or refinance equipment from an auction or private party.
How to get a loan for farm equipment
The best farm equipment loan for your business will ultimately depend on your individual financing needs and how well you meet lenders’ eligibility requirements. Here are some tips to help you get the right loan for you:
Evaluate your financing needs. Consider what type of equipment you’re looking to purchase and how much it costs. Some lenders may specialize in heavy equipment financing, for example, while others may not fund used equipment purchases. Understanding your specific needs can help you effectively direct your funding search.
Check your qualifications. Most lenders will use your personal credit score, time in business and annual revenue to underwrite your loan application. Reviewing these metrics ahead of time will give you a sense of where your business stands before applying.
Consider your down payment. Some lenders will require you to provide a down payment for your farm equipment financing — potentially up to 30%. If you can’t afford a down payment, you’ll want to look for lenders that offer zero-down financing. Alternatively, providing a down payment (especially when it’s not required) may help newer businesses or borrowers with bad credit qualify.
Get an equipment quote. Most lenders will want you to provide an equipment quote as part of your loan application. You should compare prices for the equipment you want to purchase to determine where you can get the best deal.
Compare farm equipment financing options. If you can qualify, opting for an FSA, SBA or bank loan may offer you the most competitive interest rates and terms. Online lenders may be a suitable choice, however, if you need fast funding or can’t qualify for more traditional options. In any case, you should research and compare multiple lenders to find the right fit for your needs.
Organize and prepare for your application. Most lenders will require you to provide basic information about you and your business, business financial documents and tax returns, among other paperwork. It can be useful to pull this information ahead of time to expedite the application process. You should also read the application instructions carefully — answering questions as intended and providing accurate and up-to-date documentation will help you get approved faster.
You can get a farm equipment loan structured as a traditional term loan and a business line of credit. You can also get an equipment lease to acquire machinery for your farm. Farm equipment loans are available from the FSA, SBA lenders as well as online and direct lenders.
Generally, repayment terms on farm equipment financing are based on the anticipated life of the machinery you’re buying. Terms may range from one to 10 years.
Yes, in most cases, interest payments on farm equipment loans are tax-deductible. According to the IRS, you can deduct interest on debt as long as:
You are legally liable for the debt.
You and the lender intend that the debt be repaid.
You and the lender have a true debtor-creditor relationship.
There are some restrictions based on your interest expenses and business income for the year.
Last updated on May 16, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.