Agricultural Lending 101

Agricultural Lending 101

Agriculture is a cornerstone of the American economy. Yet, small and mid-size farmers and ranchers face a wide range of financial difficulties, from start-up capital to cash flow irregularities that impede daily operations. Agricultural loans can provide the solution, but these are typically far more complex than standard personal or business loans. It’s important for agri-businesses to establish a solid relationship with a community bank that has experience with the nuances of agricultural lending.

Purchasing Agricultural Land and Facilities

The initial funds needed to purchase land and facilities can be a major obstacle for a new farmer or rancher. But even if an agri-business is already established, it may eventually need to purchase additional land for grazing or cultivation, and additional facilities to support the new output. Before visiting a loan officer, agri-business owners should know exactly how much land they’ll need, what size and type of facilities they’ll need, and how much all of it will cost.

Meeting Annual Operational Needs

Agri-businesses are often characterized by cash flow irregularities, especially if the previous year was marked by crop failures or severe livestock illnesses. This poses a challenge, since liquid assets are needed for day-to-day operations. One common type of agricultural loan is the annual operating loan. Agri-businesses can use this short-term loan for the purchase of seed, fertilizers, cattle feed, fuel, labor, and similar operational expenses.

Purchasing Livestock and Equipment

Livestock and equipment purchases are significant expenditures for all agri-businesses. For small and mid-size farmers and ranchers, it can be tough to pay for these out of pocket. The solution is a loan intended for intermediate asset purchases, such as livestock and equipment.


With a wealth of experience in all types of agricultural lending, Mountain Valley Bank is the lender of choice for farmers and ranchers near the Steamboat Springs, CO area. Their loan officers can customize financial products and solutions to fit the unique needs of agri-businesses of all sizes. Visit their branch today or call the lending department at (970) 870-6550.