What are the different types of agricultural finance?

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agricultural financeagricultural finance

What are the different types of agricultural finance?

As a farmer in need of agricultural finance, it can be confusing as to which finance best suits your needs and budget. The application process in itself can be difficult, but if you know what type of agricultural finance you need it can become much easier.


Input finance for purchasing farm materials and livestock funding

For those wondering “What is agriculture finance?” one of the aspects of it is input finance. It is used for purchasing farm materials such as livestock, feed, seeds, and fertiliser. You can also use it to purchase livestock such as pigs, cattle, sheep or goats.

This finance may not cover the costs of large equipment or machinery but it does allow you to purchase other essential items that help with the smooth running of your farm. You can also use this finance to purchase other materials or even small equipment such as compact tractors or farming tools.


Emerging farmer finance

This type of finance is aimed specifically at SMEs and start-up farms. Emerging farmers often battle to gain access to the financial aid that they need, due to the fact they are considered to be higher-risk clients than their more established counterparts.

Emerging farmer finance is usually provided by financial institutions and by commercial banks, as private lenders may view it as a risky investment. If an SME or emerging farmer can be assisted to receiving a contract from a large-scale retailer, this contract can be ceded to a financial institution as security for their loan. You may find that finance for a start-up loan requires some form of collateral.


Asset finance

If you do not have the cash upfront to pay for an important asset, you can look into asset finance to aid the situation. Asset finance requires detailed descriptions of the equipment you need as well what you will be using it for.

Asset finance will allow you to purchase or replace any equipment you may need, such as milking equipment, tractors, harvesting machinery and any other assets that come with a large upfront cost. You could also look into leasing this equipment, if you do not need to use it for an extended period of time.


Establishment loans

An establishment loan is a lon provided to farmers who plant and harvest perennial crops. These loans are available for establishing sugar cane plantations, citrus and deciduous fruit orchards, timber plantations and vineyards for table and wine grapes.

You are not limited with this type of agricultural loan, and can apply for it if you are a commercial farmer, an individual farmer or any legal entity. It can be useful for those who are looking to expand what they will be farming or are interested in other avenues of income regarding agriculture.


Installment finance

This is a form of medium-term loan wherein the goods that you purchase are used as the main security for the loan. This means that the goods belong to the bank until you have repaid the loan and this type of loan is typically used for the purchase of equipment, implements, vehicles or livestock.

Installment finance allows farmers with limited budgets and assets to grow their business. It is the ideal choice for an SME or emerging farmer to choose for purchasing new essential farming equipment. The package is usually available from three to ten years, depending on the expected lifespan of the equipment and any type of farmer may apply for this finance.


Vehicle finance

While this may not seem like the most immediate choice of finance for a farm, the fact of the matter is that farmers need vehicles too. You may need specialist vehicles for certain tasks such as tractors, feed mixers and combine harvesters.

As a farmer you will also need a sturdy vehicle to traverse your farmland, and may not have the extra finances to purchase one. You can choose between hire purchase and lease agreements, and decide on one with better interest rates to suit your needs. This is perfect for farmers who need a new truck or vehicle to transport goods and workers around the farm.


Special mortgage loan

The special mortgage loan is aimed at farmers who have the potential to become successful but who have experienced setbacks such as being denied the right to purchase land. It offers a special interest rate for those who may not be able to pay the higher rates that some banks offer.

The rate is fixed over 24 months and the maximum amount is R500 000. You can pay this loan back over 25 years, making it highly affordable for those who are previously disadvantaged. You will qualify for this loan if you have been denied the right to buy land, are the son or daughter of someone who owns farmland (as a first time buyer) or if you own land in a town or a city.



There are several different options for those who are in need of agricultural finance. You will be able to find one to best suit your needs, and your budget. Be sure to research every aspect of whichever one you choose and read the fine print before signing anything. It may seem a daunting prospect but you will be able to find finance to help your farm grow.

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