How to Get an Equipment Loan for Your Farm

Need new machinery for your farm but don’t have the cash upfront? A heavy equipment loan might be the answer.

What Is an Equipment Loan?

An equipment loan helps you buy equipment pieces needed for your operation like tractors, seeders, combines, or other heavy equipment machines. These loans spread out the cost, so you can get what you need now and pay it off over time. They're made for farmers who want to stay productive without draining their savings.

Main Types of Loans

There are a few loan options depending on your situation:

1. Operating Loans
   These cover general expenses—including buying livestock, or supplies. They’re flexible and often go up to $400,000. Good for smaller farms that need quick support.
2. Equipment Loans
   Designed specifically for buying or upgrading equipment. They usually last three to seven years. Many financing programs, like  Farm Credit EXPRESS offer options to purchase or lease new and used equipment.
3. Leasing
   Leasing lets you use the equipment without owning it. It's a way to keep costs low and still access modern technology. Plus, you can talk with your accountant about the potential tax advantages of a leasing payment. Maintenance is sometimes included, which can save you even more.

What You’ll Need to Qualify

Lenders look for a few basic things:

• A credit score of 600 or higher
• Clear, organized financial records
• Proof of steady income or revenue
• A business plan or other documentation
• Equipment often serves as collateral

Be honest about your finances. Lenders want to see you're reliable and upfront.

How to Prepare Your Application

Having your paperwork in order up front can speed the process along. Start with:

• Tax returns and cash flow statements
• Purchase agreements or leases
• Business licenses or registrations

If you’re applying through the Farm Service Agency (FSA), be ready to complete their specific forms. Starting early gives you more time to fix mistakes and collect what you need. FSA offers support if you need help with paperwork or understanding your options. Tools like accounting software can help you track everything in one place.

Picking the Right Lender

Don’t just go with the first name you find. Compare rates, loan terms, and customer service.

Some good places to start:

• Farm Credit EXPRESS– Known for competitive rates and flexible terms.
• Farm Credit– Specializes in agriculture-focused financing.

Each lender has pros and cons, so shop around. A better rate can save you thousands over the loan’s lifetime.

What the Application Process Looks Like

Applying for a loan usually includes:

1. Meeting with a loan officer or lender
2. Submitting your financial documents
3. Gettinga creditdecision—sometimes within minutes

Making a Repayment Plan

Once you get the loan, make sure you can stick to your repayment schedule.

• Align your payments with your income cycle
• Use a budget tool tomonitorexpenses
• Focus on paying down high-interest loans first

Falling behind payments can hurt your credit and limit future loan opportunities.

Why Financing Equipment Helps

Financing lets you:

• Increase productivity with newer, faster machines
• Lower labor costs
• Stay competitive with other farms

It’s a practical way to grow your farm without draining your cash reserves.

Mistakes to Avoid

Here are some common issues that can throw a wrench in your equipment financing:

• Skipping your credit check:Know your score before you apply.
• Not reading the fine print:Understand interest rates, penalties, and feesbefore you sign on the dotted line.
• Rushing the process:A quick decisionnow canlead to expensive regrets later.
• Not contacting a lender before you head to the auction:If you are heading to an auction to bid on a piece of equipment, call your preferred lender beforehand to discuss your options, and see if you can get pre-qualified up front. This will make your purchaseexperience more efficient.

Final Thought

An equipment loan isn’t just about buying new machines—it’s about improving your farm’s future. Get clear on your needs, understand your options, and choose a lender who fits your goals. The right equipment can make your work easier, faster, and more profitable.

Want easy equipment financing? Check out Farm Credit EXPRESS and see how you can get a decision in minutes, right at your local dealership.