Home - Financing Your Farm Business
Careful financial planning, building relationships with lenders and investors, and understanding the financial resources available are keys to successful financing for your farm. Financial planning involves understanding your income and expenses for your family and business, and getting real estimates for needed changes, purchases or upgrades to your business. Building relationships requires an understanding of the 5 C’s of credit (Character, Capital, Capacity, Collateral, and Conditions) as well as getting your potential lender out to the farm to better understand your business and financing needs.
Understanding the financial resources available takes time and effort. Where to find lenders who both understand farming and appreciate the challenges and risks inherent to running a farm business is not easy. Start with evaluating your own capital resources, followed by local credit unions and banks you currently do business with. Then broaden your search with the resources listed below.
General Resources on Financing your Business
- Finding Funds For New and Beginning Farmers Directory (PDF) – a comprehensive listing of State and Federal resources available to farmers. Not all banks and grant funding sources are available to each farm, but this is a good source to begin your search.
- Financing Your Business Start-up – overview of business financing from the Small Business Development Center (SBDC)
- SBDC resources on financing your business
- Financing Your Farm – Guidance for Beginning Farmers – National Sustainable Agriculture Information Service
Financial Institutions/Entities to Contact for Direct Assistance
Community Banks – It is always worth talking to your community bank first and establishing a working relationship whenever possible with the commercial lending team. Some banks are more favorable towards agricultural lending than others, but you will never know how active a bank is in the agriculture sector until you have the conversation about your farm business needs with a lender.
Farm Credit of Maine – the leading farmer cooperative bank in Maine that does a significant portion of lending to the agricultural community in Maine.
Alternative/Non-Traditional/Non-Regulated Financial Institutions (CDFIs, NGOs, CDCs)
The following institutions have various programs which might serve your needs. They have slightly different requirements than traditional sources of capital, and sometimes can work in conjunction with your commercial bank.
- Androscoggin Valley Council of Government (AVCOG) Micro-Loan and Business Loan Programs
- Coastal Enterprises, Inc. (CEI)
- Community Concepts
- Cooperative Capital: Cooperative Fund of New England
- Four Directions Development Corporation (FDDC)
- Maine Rural Development Authority: Commercial Facilities Development Program and Speculative Buildings Program
- MaineStream Finance
- No Small Potatoes Investment Club
- Slow Money Maine
- Somerset Economic Development Corporation
- Sunrise County Economic Council (SCEC)
- Washington Hancock Community Agency/Down East Business Alliance (WHCA/DBA)
- Maine Organic Farmers and Gardeners Association (MOFGA) Organic Loan Fund
State and Federal Agency Loan Programs
State and Federal agencies have various development programs that have financing available, and typically work with commercial and alternative financing agencies to make a deal work.
- Maine Agricultural Marketing Loan Fund
- Nutrient Management Loan Program
- Potato Marketing Improvement Fund
- Agricultural Development Grant
- Agricultural Water Source Development Cost Share Program
- Maine Farms for the Future
Loans: United States Department of Agriculture (USDA)
Farm Service Agency (FSA):
- Beginning Farmers and Ranchers Loan
- Direct Farm Loan Program
- Farm Storage Facility Loan Program
- Rural Youth Loans
- Socially Disadvantaged Persons Loan Program
Rural Development (RD):
Grants: United States Department of Agriculture (USDA)
Rural Development (RD):
- Rural Energy for America Program (REAP) Grant Program
- Value-Added Agriculture Product Market Development Grant (VAPG)