Farm business is a very lucrative venture. As we all know, everyone must eat. Understanding how your food is grown and where it’s grown isn’t a bad idea. People that own a farm know how expensive it is to maintain.
Anyone trying to start a farm for the first is more likely to spend double that amount as they have to procure farmland, thereby raising the expenses.
Applying for a loan is often the best idea, and that also applies to those who want to expand their farm operations. Many private and government bodies offer services on how to get a loan for your farm business to new or old farmers.
How to Get Loans for Your Farm Business
Here are some steps you can take to acquire capital for your farm business.
Evaluate Your Needs
Make a plan, detailing everything you need and their price. This way, you can determine the exact amount you need to start up and still stay afloat. Though loans for farmers are readily available and at low-interest rates, you might be tempted to take out a more considerable amount than what you need. Therefore, it is important to know what you need to avoid massive debt and also to enable you to attain financial independence.
Thus, it is recommended that you determine the loan amount you need and only take out so much.
Get the Documents
Most banks, including commercial, credit union, and agricultural banks, have minimal documentation requirements for farm business loan approval to allow quick loan processing and disbursement. Below are some documents you might need to ensure the smooth processing of your loan:
- Proof of Identity – this can be in the form of a National ID Card, Voter ID, Driving License, International Passport, etc.
- Credit score — that is your statement of account, bank details
- Land ownership — you need to tender the receipt or land documentation. Anything that proves your ownership of the land
- A guarantor — it can be your spouse, siblings, or friend and others.
Although these are some documents that banks are primarily required to process your application, there might be other documents they can ask for, depending on your loan type and the bank or committee you go to.
Check for your Eligibility
Generally, banks offer agricultural loans to all types of farmers as long as they are between 18 and 65 years of age. However, eligibility can vary as some banks can have different requirements and also the loan type. Be sure to contact the bank or body you wish to borrow from and make inquiries concerning their eligibility criteria.
Ask about the Interest Rates
Inquire about the interest rate to ensure the amount you will be returning should you get the loan. The interest rate for agricultural loans is at 9% per year with some banks.
However, the rate interest rate might vary with some parastatals, depending on the loan type you take and the business you’re acquiring the loan for. Therefore, it’s highly recommended that you contact the bank and get full information about it.
Examples of Agricultural Loan Agencies in Nigeria
The Central Bank of Nigeria provides loans for farmers through some agricultural schemes:
- Commercial Agriculture Credit Scheme (CACS)
- Agricultural Credit Guarantee Scheme Fund (ACGSF)
There are also some private and non-government organization that offers farmer loan commercial banks like
- First Bank, Stanbic IBTC, Union Bank, and Access Bank
Bank of Agriculture (BOA): This is also another government parastatals that offer loans to farmers.
So if you have all the information and the documents at hand, you can approach any bank in your state to submit your loan application for your farm business.