While not drastically different from regular loans, there are some agriculture loan requirements that are specific to the farm and agribusiness industries. Requirements may vary from lender to lender, but here’s our breakdown of how to qualify for an agriculture loan.  

Typical ag loan requirements for direct ownership loans

Direct ownership loans are designed to help farmers purchase or expand their farms or farm businesses. These loans provide assistance to farmers who have the necessary experience but lack the financial resources to buy land or make significant improvements to their existing operation. These agriculture loan requirements include: 
 

• Be a U.S. citizen or permanent resident
• Have acceptable credit  
• Demonstrate the ability to repay the loan
• Have legal capacity to incur the obligations of the loan
• Provide a feasible business plan 

For FSA loans in particular, you also need to prove that you are unable to secure credit from a traditional financial institution and you need to own or operate a family-sized farm. 

Operating loan requirements

Operating loans are essential for covering day-to-day expenses on the farm, including inputs and labor costs. These loans provide the necessary funds to ensure smooth operation and financial stability throughout the year, but they typically have an additional requirement of providing suitable collateral to secure the loan. 

New and beginner farmer loans

Young and beginner farm loans are designed for individuals who are new to farming or have limited farming experience. These loans help aspiring farmers overcome financial barriers and establish a successful farming operation. Additional beginner agriculture loan requirements could include: 

• Meeting the eligibility criteria for direct ownership loans
• Being a new/beginning farmer with 10 years or less of farming experience
• Participating in a borrower training or farm management program 

At Horizon Farm Credit, the requirements for a new and beginner farm loan are a bit more flexible to include relaxed underwriting standards and access to an online ag business learning program called Ag Biz Masters. 

Horizon Farm Credit loan requirements

These are general requirements and may vary slightly from lender to lender. It's always a good idea to check with your preferred lender for a list of their specific requirements before applying. At Farm Credit, some of the specifics we’ll ask for include: 

• 20-30% down payment (some exceptions apply)
• Three years of tax returns
• Bank Statements
• Business Plan  
• Balance Sheet
• Asset verifications like stocks, mutual funds, retirement accounts, etc.
• Pay stubs or YTD profit and loss statement
• Copy of your Driver’s License 

Farm Credit is committed to helping you navigate the agriculture loan process and secure the loan that best fits your farming needs. From direct ownership loans to beginner farmer loans, we're here to make your farming goals a reality. So, don't hesitate to reach out, and let's cultivate your farming future together. 

Opportunity is knocking, and it’s time to reach out and seize it. With the recent rebound in Class III milk prices, the outlook for milk futures is increasingly promising. Now is an ideal time to secure a milk price that exceeds your break-even point, extending as far as the next five quarters. But how? The answer lies in Dairy Revenue Protection.

Understanding Dairy Revenue Protection

Dairy Revenue Protection (DRP) is a revenue-based risk management tool that uses futures prices from the Chicago Mercantile Exchange (CME) for class pricing and Agricultural Marketing Service (AMS) formulas for component pricing. This tool allows producers to purchase price protection by quarter, by hundredweight, and either by class or component pricing for up to five quarters in advance.

Class III pricing is based on cheese products, while Class IV pricing is tied to butter and dry products. With class pricing, producers can manage their risk by diversifying across various dairy products. For instance, if the market for Class III declines while Class IV remains steady, as was observed after COVID-19, a producer can mitigate risk by splitting their endorsements between classes, making separate endorsements for Class III and Class IV.

Another approach is component pricing, which pools all products together—such as butter, cheese, dry whey, nonfat dry milk, butterfat, protein, other solids, and nonfat solids—into one pricing model.

How Endorsements Work

Endorsements can be secured at 80-95% of the price. For example, if the forecasted Class III price for the upcoming quarter is $20.00 per cwt., selecting 95% price protection would insure the price at $19.00 per cwt. If the price drops to $17.50 per cwt. during that quarter, the insured milk would receive an indemnity (payout) at a rate of $1.50 per cwt.

It’s important to note that milk can only be insured once under DRP. If 100,000 lbs. are produced, then no more than 100,000 lbs. can be insured. However, DRP offers an option to protect up to 1.5 times the milk’s guarantee. For instance, if 100,000 lbs. are produced, it can be insured with a 1.5 protection factor, effectively safeguarding 150,000 lbs. of production.

Seize the Opportunity

Milk prices are up, and opportunity is knocking. Our team of risk management specialists is ready to help you lock in a milk price that exceeds your break-even cost of production. Stability is just one call away—reach out to us today!

Chevy Martin, Crop Insurance Agent

When reflecting on my son’s first T-ball game this year, the only word that comes to mind is "chaos." Half of the team was chasing after a ball slowly dribbling through the infield, while the other half was content playing in the dirt. The scene elicited laughter from every parent and grandparent, regardless of which team they supported. The young players were clearly having fun, but they had little understanding of where to stand or run. For them, covering the bases wasn't a priority (and with no one getting called out, it didn't need to be!).

In contrast, succeeding in agriculture is far from fun and games. Covering all your bases is essential. For anyone involved in production agriculture, one of the critical bases to cover is risk management. Much of the Mid-Atlantic region has faced significant drought this summer, and the impacts are expected to be evident during the fall harvest. With the right coverage, you can ensure that your finances will support the crucial operations needed to keep your farm running.

Looking ahead, beyond the fall harvest for corn and soybeans, it's important to consider the crops that will be planted next: winter wheat and barley. These small grains play a vital role in many diverse farm operations, yet they are often overlooked in risk management strategies. As input costs continue to rise and the grain markets grow more volatile due to global events, the importance of safeguarding your crops cannot be overstated. Weather patterns are shifting, and extreme conditions are becoming increasingly common. Now more than ever, it's crucial to assess and address the risks associated with every aspect of your operation. This fall, be sure to connect with your agent to get a quote for a new policy or to review your existing coverage to ensure it meets your current needs.

A wheat or barley policy can provide protection from various risks, including:

• Hail
• Frost/Freeze
• Excessive Moisture
• Wind
• Drought
• Naturally occurring fire
• Insects and Plant Disease
• Wildlife damage
• Quality loss from Vomitoxin
• Changes in harvest price from the projected price

The deadline to make changes to your wheat and barley policy is rapidly approaching. Be sure to speak with a crop insurance agent before September 30th to ensure all your bases are covered!

Joel Alsdorf, Crop Insurance Agent

Perennial crops are a vital part of the agricultural community and can sometimes be overlooked or taken for granted. These remarkable fruits, nuts, and berries positively impact the local communities in which they’re grown. The trees, vines, and bushes provide significant carbon sequestration, erosion control, nutrient retention, pollinator support, fiber, flavor, and beauty to everyday life. They are the lifeblood of many communities around the globe. Their infrastructure provides jobs, promotes healthy eating habits, and injects countless dollars into the local economy. Nearly every household in America likely benefits daily from some type of perennial product.

When envisioning perennials, one might picture rolling rows of vibrant foliage, feel the cool breeze rich with the spice of a million blooms, and imagine the aroma of ripening fruit in pastel hues cascading below curtains of emerald green. One might also think of the farmers who dedicate generations of lives to roadside stands, farmers markets, and diverse supermarket aisles.

How many consumers have ever asked themselves what would happen if these crops failed. How would that impact the farmers, the local economy, and their eating habits? Would there be missed educational opportunities for farm kids to bring innovative technology and science back to the farm? Perennials truly epitomize the concepts of symbiosis and sustainability.

Farmers understand what it takes to bring food to the table. They know how hard it is to navigate the variables and unpredictable circumstances producers face. There is always something competing for the nutrition they depend upon. As producers, they need every resource they can utilize to yield nutritious, affordable food while hoping to make a profit. Building intentional relationships of trust and substance is vital to achieving these goals.

Relationships with people who understand financial goals, accounting needs, and risk mitigation strategies can go a long way in supporting farmers in their areas of expertise. In an ever-changing world, planning for the next generation can feel like a daunting task. It is truly amazing for farmers to have a support network that understands how to work hard together, enjoys helping solve problems, and takes pride in their success. Horizon Farm Credit would like to thank farmers for their dedication and perseverance in providing for our communities.

Farm Credit’s crop insurance agents are knowledgeable and prepared to help discuss coverage options for your unsung heroes: perennials. Contact us today at 888.339.3334 or learn more here.

Written by Jessie Savidge, Accounting Officer

At Farm Credit, we understand the complexities and responsibilities that come with managing payroll. From ensuring timely tax deposits to handling deductions and compliance, we’re here to simplify your payroll process so you can focus on what matters most – growing your business. 

Managing payroll involves more than just issuing checks. It’s about navigating regulations, deadlines, and penalties, while being accurate and timely. One of the most common challenges our clients face is compliance with tax regulations and deadlines. Missing deadlines for payroll tax deposits can lead to penalties and interest. Our team helps mitigate these risks by ensuring timely filings and deposits, keeping your business in good standing with regulatory requirements.

Another critical aspect is managing deductions and wage garnishments accurately. Our payroll services include support for handling these aspects, making sure that all legal requirements are met, and employees receive accurate compensation according to their deductions.

We also recognize that technology limitations can hinder payroll efficiency. Some systems may not support direct deposit or lack the flexibility needed for customized payroll needs. Farm Credit offers comprehensive in-house support, providing accurate hour tracking and customized payroll services tailored to your needs.

Our expertise extends beyond basic payroll processing to include tax obligations. We manage quarterly filings and deposit frequencies, minimizing the risk of penalties and interest for late or incorrect filings. We also handle tax returns and tax planning. Our services are customized to your needs. We provide one on one help to guide and build a plan for you.

Flexibility is key to our service offering and our payroll solutions are adaptable to your business cycle and growth trajectory. By partnering with Farm Credit, you gain peace of mind knowing that any penalties or incorrect filings fall directly to us. 

Our payroll team is dedicated to providing personalized service and is prepared to help discuss solutions for you. Ready to simplify your payroll process? Contact us today at payroll@horizonfc.com. 

Farm Credit is now accepting applications for its Farmers on the Rise program, which awards up to ten beginning farmers with $10,000 to grow their operations. The Farmers on the Rise award program honors outstanding beginning farmers within the diverse agricultural community who excel in their field. 

“The Farmers on the Rise program recognizes the achievements of the next generation of agricultural leaders and empowers them to realize their dreams,” said Tom Truitt, Horizon Farm Credit Chief Executive Officer. “We are proud to support these farmers in their efforts to grow and innovate for the future of their operations.” 

Farmers on the Rise award winners are selected based on their efforts in agriculture, financial character, leadership and community involvement, and environmental stewardship. The award program is open to beginning farmers who have at least three years, but no more than ten years, of farming experience. 

“Each year, we are continually impressed by the exceptional quality of applicants,” said Johanna Rohrer, Horizon Farm Credit Member Education & YBS Program Manager. “Their passions and creativity are truly inspiring, and our panel of judges is eager to learn more about this year's applicants.” 

This competitive award program is open to all open to Farm Credit customers and non-customers operating within the Association’s 100-county footprint. The deadline to submit an application is September 23 at 4 p.m.  

For more information and to apply, click here. Contact learning@horizonfc.com or give a member of our team a call at 888.339.3334 with questions about this program or the application. 

Allison Beichner, Ag Relationship Manager and Phil Taylor, Ag Business Consultant

Knowing the financial position of your farm business is critical to its future success. One of the most important financial statements in helping you to understand the financial performance of your operation is the balance sheet.  

A balance sheet measures your financial position at a specific point in time providing an overview of the equity position — also known as net worth — of your farm or business, in addition to cash investment. Equity is the owner’s personal investment in the farm or business as measured by the assets owned over the debt owed. A balance sheet showcases equity as current and noncurrent assets less current and noncurrent liabilities, and all are important components of a successful business. We'll get into the nitty gritty details of a balance sheet in this article.

Do I really need to complete an annual balance sheet?

Yes! Most farmers and business owners look at their cash position or year-end profit or loss as a measure of success, however, the cash position isn’t the only measure of business success. Completing a balance sheet allows you to see how your farm business’ equity has changed and grown from year to year by giving credit to adjustments for inventories, assets purchased and the change in liabilities throughout the year. Because a balance sheet shows a snapshot of your operation, it is recommended you prepare a balance sheet as of December 31 each year.  

Other benefits of completing a balance sheet each year include:

• Improving your understanding of your business’ financial position, which allows you to make more informed management decisions on your farm for the future based on your equity.
• Lenders, such as Farm Credit, use this information to assess your business. Having a balance sheet completed can expedite loan approval when completed accurately and as of December 31 of each year.
• It demonstrates to your lender a greater initiative and interest in how your business performed from year to year.
• Information on the balance sheet can be used to calculate key financial ratios for your farm.

In addition to creating a balance sheet for your farm business, it is also recommended to complete a separate, personal balance sheet on your individual finances. 

The Basics of a Balance Sheet

The three main components of a balance sheet are assets, liabilities, and owner’s equity. The standard accounting equation represented on a balance sheet is:

Assets = Liabilities + Owner’s Equity

Assets

Assets are anything owned by a farm business that has monetary value. Assets are classified as current and noncurrent.     

Liabilities

Liabilities are anything owed by the farm business. Like assets, they are classified as current and noncurrent. 

Owner’s Equity

Owner’s Equity is the area of the balance sheet that will need to be calculated since it is dependent on the value of your assets and liabilities. It shows what your business is worth as of the date of the balance sheet.

To calculate Owner’s Equity, subtract liabilities from your assets. The remaining value is Owner’s Equity.

Assets – Liabilities = Owner’s Equity

As a young and/or beginning farmer, it often feels as though progress moves slowly and business growth — and ultimately success — is not easily measured. Completing an annual balance sheet allows you to track the financial success of your business as net worth grows over time. Understanding the “change” in net worth is key.  Is net worth increasing or decreasing? Why is it changing?  

The goal is for net worth to increase each year because of the earnings generated by the farm business, not simply because assets were valued at a higher level.  Take some time to fill out a balance sheet and compare it to one completed on December 31 of this year. Do this task for three years and then reference the first balance sheet you completed to see how far your business has come.  

Want to see it explained a little easier? Check out this quick video! If you’re ready to try your hand at your own balance sheet, click here to download our balance sheet case study.  

Reporting requirements have changed and this blog may no longer be accurate.

What is a BOI Report?

The Beneficial Ownership Information (BOI) report is a new type of report required by the U.S. federal government that discloses the owners of a business. Most businesses are required to file the BOI report with the Financial Crimes Enforcement Network (FinCEN) between January 1, 2024 and March 21, 2025. This report was created to help increase transparency of businesses and help fight illicit activity through the use of business structures. There are civil penalties if the BOI report is filed late and criminal penalties for willfully failing to file. BOI reports must be updated within 30 days if there are any changes, and businesses will be required to file an updated BOI if any information changes such as address, or the addition or reduction of owners. Read below to learn more about this report.*

*While our Business Services team can provide some guidance on this matter, specific questions on beneficial ownership and your potential requirement to file the BOI report should be referred to your legal counsel as our team does not file beneficial ownership information on a customer’s behalf with the Financial Crimes Enforcement Network.   
 

Do I need to file a BOI report for my business? 

The general rule is, if you filed documents with the secretary of state — or any similar office under the law of a state or Indian tribe — when establishing your business, you may need to file the BOI report.  There are a limited number of entities exempt from filing. Here are some examples where you may not need to file a report: 
 

• Sole proprietors doing business under their own name (no corporation or LLC)
• General partnerships (no filing done with secretary of state)
• Larger businesses and non-profit organizations*
• Highly regulated industries
  • Examples include: publicly traded businesses, governmental authorities created by federal, state, or tribal governments, banks and credit unions, money transmitters, securities brokers and dealers, investment companies and advisors, venture capital fund advisers, insurance companies or producers, commodities brokers and dealers, public accounting firms, public utility companies, pooled investment vehicles, and inactive businesses

*For large businesses, you must meet all of the following criteria: over $5 million in gross revenue reported on the previous year's tax return and without any foreign-source revenue, business employs over 20 full-time employees in the United States, and have a physical office location in the United States. For non-profit organizations, you must meet one or more of the following criteria: an organization that received IRS approval for tax-exempt status under Internal Revenue Code section 501(c), a political organization that is tax-exempt under section 527(a), or an organization that is a trust under section 4947(a). 
 

Who needs to be included on my BOI report?

See the table below for a timeline on filing your initial report and an updated report if changes are to occur. 

Who needs to be included on my BOI report?

On the BOI report, you must identify the company’s beneficial owners. A beneficial owner is any individual who, directly or indirectly, exercises substantial control over the reporting company or owns/controls at least 25% of the ownership interests of the reporting company. The following information on each company and each beneficial owner must be included: 

What if I fail to file my BOI report on time?

Failing to file the required information through FinCEN by your required deadline could have significant consequences. Willfully failing to file or providing fraudulent information may result in a daily fine of up to $591, imprisonment for up to two years, or a fine of up to $10,000.
 

How do I prepare now for BOI filing?

While Farm Credit’s Business Services team can provide some guidance on this matter, specific questions on beneficial ownership and your potential requirement to file the BOI report should be referred to your legal counsel as our team cannot file beneficial ownership information on a customer’s behalf with FinCEN.  

Here are some recommended “to-do’s” in preparation for filing: 
 

• Review your list of business owners and key employees.
• Collect the Beneficial Owner personal information and make sure is up to date.
• Review your by-laws or operating agreements. You may need to add language that requires company’s beneficial owners to provide the business with required information.
  Consult with your attorney for additional support in your by-laws and filing requirements.
• Do your research at Beneficial Ownership Information Reporting | FinCEN.gov
• A reporting company can file online through the FinCEN BOI website at BOI E-FILING (fincen.gov)

If you have questions or need guidance on filing, a member of our Business Services team may be able to help. With increasing complexities in accounting, a member of our team may be the solution to your accounting and consulting needs. Visit our Business Services page to learn more or contact us today at 888.339.3334!