Farmers Limited Access to Capital
This is the second article on why farms fail . Small farms have it tough when it comes to getting financing. This can make it hard for them to grow. Often, small farms face limited access to capital for a few reasons: farming is a risky business and, to be honest, one that’s prone to failure. Many farmers don’t have the kind of collateral banks want to see for a loan. Banks aren’t generally willing to base loans on the farmland itself but rather on the farm buildings or equipment you’ve got on it. And in rural areas, it’s not like you have a bunch of banks nearby focused on farming. There are some agencies, like the Farm Credit Bureau and the USDA’s Farm Service Agency, that offer loans for farmers. We’ll dive into those a bit later, but it’s important to know they exist. With limited access to traditional capital, though, it’s critical for a new farmer to look ahead—beyond the first year, ideally out to year five—and figure out how they’re going to fund their growth and make the f
