Traditional Sources
Show Me the Money-Finding Funding for Your Business
Whether you're a beginning farmer, a food entrepreneur, or managing an established operation, securing funding is often a necessary step in launching or growing your business. From purchasing equipment and land to developing new products or expanding markets, financial resources can help turn your goals into reality.
Understanding Your Funding Options
There are two primary types of external funding for agricultural businesses: loans and grants. While both can provide critical capital, they come with distinct advantages, requirements, and challenges.
Before You Apply: Know Your Debt Tolerance and Reduce Costs
Before applying for any funding—grant or loan—it’s essential to evaluate how much debt you can responsibly carry and how much equity or upfront capital you may need to contribute. You may also explore strategies to reduce your initial costs, including:
- Renting or leasing land and equipment
- Starting small or part-time
- Buying used machinery
- Outsourcing tasks through custom hiring
These strategies can help reduce your risk while your business grows.
Loans
Loan programs are widely available for farmers and food entrepreneurs, especially through institutions like the USDA Farm Service Agency (FSA), agriculture lenders, and community banks. Loans may help finance operating costs, land purchases, equipment upgrades, or infrastructure improvements.
However, many farmers express frustration with the amount of documentation and time required to apply. Loan applications typically require:
- A detailed business plan
- Personal and business financial statements
- Credit history
- Collateral (in some cases)
Despite the paperwork, a loan can be a vital tool to help implement critical parts of your business plan.
Resources
- USDA Loan Eligibility Tool: Determine if your household income and location qualify for certain USDA loans
- Applying for a Farm Service Agency (FSA) Loan
- Review of Lender Requirements for Beginning Farmer Loan Programs
Grants
Grants are appealing because they don’t require repayment. However, they are highly competitive, narrow in scope, and often require planning and reporting. Many grants:
- Require upfront investment before reimbursement
- Target very specific outcomes (e.g., conservation, food access, education)
- Are not guaranteed and should not be relied on for core business operations
Before applying for a grant, assess whether your project aligns with the grant’s objectives. Carefully review eligibility requirements, and be prepared to write a strong proposal with measurable goals and a clear budget.