How to Finance Grain Storage and Silos for Your Farm
Building or upgrading grain storage can boost your farm's efficiency, protect your crop quality, and give you more control over when and how you sell. But storage infrastructure is a big investment, and finding the right financing strategy is essential.
Why Grain Storage Matters
On-farm grain storage gives farmers more control. It reduces waste, keeps grain in better condition, and allows you to wait for stronger market prices instead of selling immediately after harvest.
Silos also improve logistics. With grain on hand, you can manage deliveries better, simplify harvest operations, and cut down on urgent transport costs. In short, grain storage means flexibility, higher value, and lower risk.
1. Asset Finance for Grain Silos
Asset finance lets you fund equipment purchases—like grain silos—without a large upfront cost. Instead, you make regular payments over time.
This approach:
- Helps preserve cash flow
- Aligns repayment with seasonal revenue
- Can offer flexible terms based on your farm's financials
To qualify, prepare solid financial documents—tax returns, balance sheets, and income statements. Be sure to compare providers for interest rates, fees, and agricultural expertise.
2. Commercial Loans
Traditional banks and ag-focused lenders offer commercial loans for storage projects. These loans can cover new buildings, upgrades, and even drying systems.
Requirements usually include:
- A detailed business plan
- Collateral
- Good credit history
- Flexibility/Feasibility
- More options (lease option)
3. Farm Storage Facility Loan (FSFL) Program
- The FSFL Program, offered through the USDA's Farm Service Agency (FSA), helps farmers build or upgrade storage structures and equipment. Here's how it works:
- Loan amounts up to $500,000
- Terms from 3 to 12 years
- Interest rates from about 3.875% to 4.5%
- 15% down payment required
- Since 2000, over 33,000 FSFL loans have been approved. It's one of the most accessible options available—especially for small to mid-sized farms.
Lenders like Farm Credit specialize in these types of agricultural loans and can offer personalized terms based on your operation.
Key Considerations When Financing Storage
Before committing to a loan, think through the full picture:
Interest Rates and Terms
Rates can vary widely. Some loans are short-term (1–5 years), while others extend over a decade. Shop around and compare.
Total Cost of Ownership
Storage costs go beyond construction. You'll need to budget for:
- Insurance (~0.5% annually of the asset's value) - Contact your agent for an estimate.
- Repairs and maintenance (3–5% yearly for equipment) - Contact your dealership for an estimate.
- Property taxes – Contact your local township for an estimate.
- Depreciation – Contact your accountant for an estimate.
Understanding all expenses helps you choose the right size and scale of investment.
Ways to Maximize Your ROI
Smart storage investments can pay off over time. Here's how:
Maximize your Marketing Strategy.
- Sell when prices peak – Storage lets you wait out dips in the market.
- Avoid elevator delays – Keep operations smooth and timely during harvest.
- Reduce drying costs – Control the process in-house for better efficiency.
- Add property value – A well-planned storage setup increases long-term resale or rental appeal.
Application Process
To apply for financing:
- Gather your financial documents – Up-to-date tax returns, balance sheets, and income statements.
- Estimate your funding needs – Know what you want to borrow and why.
- Choose a lender – Look for experience in ag financing and good customer support.
- Submit your application – Many lenders assist with paperwork or offer online portals.
Alternatives: Leasing or Partnerships
If a loan isn't the right fit, consider:
- Leasing – Spread payments over time and avoid the upfront purchase cost.
- Partnerships – Share the cost and use of storage with other farmers or local co-ops.
Both options offer flexibility while keeping ownership costs low.
Final Thought
Grain storage gives you options—better crop quality, improved logistics, and stronger profits. With a clear financing plan, you can make that investment work for your farm's future. Contact us today to learn more about your financing options with Farm Credit.