How to Finance the Purchase of Farmland
The following list of lenders is not intended to be exhaustive. Rather, it puts in one place, the major sources of agricultural financing organizations in Vermont. Banks and other for-profit lenders typically offer competitive interest rates. Governmental lending institutions, such as the USDA Farm Service Agency and the Vermont Agricultural Credit Corporation, offer entry loans at subsidized rates to encourage business startups. Typically, these subsidized sources have a five to seven year limit on the length of loans, with transfer to the more commercial sources expected at that time. In all cases, however, a detailed business plan, including market analysis, projected first year cash flows, risk management and exit strategies will be expected as a part of the loan application process. Sources for help with this planning should be used prior to any contact with the loan institutions.
Please note: Programs and eligibility requirements change regularly, so visit the links or contact the organizations directly for the latest information.
- Commercial Banks. Check with your local bank to see if they make agricultural loans.
- The Vermont Agricultural Credit Corporation (VACC) is a non-profit division of the Vermont Economic Development Authority. VACC makes loans to “farmers and agricultural facilities who are not having their financial needs met by conventional agricultural credit sources.” Call (802) 828-5267 or visit online.
- Yankee Farm Credit is an agricultural credit cooperative owned and governed by its farmer customers. Yankee makes farm ownership loans of up to 75% of the appraised property value. Call (802) 879-4700 or visit online for more information. Yankee also offers operating loans and a variety of financial services including: tax preparation, tax planning, financial recordkeeping, payroll, appraisals, equipment leases, crop insurance and credit life insurance.Yankee is structured as a cooperative which entitles eligible members stockholder voting rights and an opportunity to share in the earnings through the distribution of patronage dividends.
- USDA Farm Services Agency (FSA) loans can be excellent opportunities for farmers who are “unable to obtain financing from commercial lenders.” FSA gives special priority to beginning farmers, as long as there is a demand from beginning farmers for the loans.
- Vermont Community Loan Fund’s Food, Farms & Forests Fund provides financing to farms, food producers, incubators, CSAs and farmers markets for land acquisition, facility construction or improvement, equipment, inventory and working capital. Terms range from several months to 20 years.
- The Vermont Farm Fund at the Center for An Agricultural Economy works in partnership with Pete’s Greens to offers loans to Vermont farmers and food processors.