Various financial institutions in South Africa offer agricultural loans to farmers. These loans give them the financial backing they need to improve the production of food in the country. You could imagine the situation in a country that doesn’t boast many farmers. What agric loans mean, how to apply for agricultural loans in South Africa, requirements, things you can do with them, etc. are all-inclusive in this article.
What are agric loans?
Agric loans are the loans farmers get that help them run their farms more efficiently. These types of loans usually come with low-interest rates. This is because farmers spend a lot of money to run. Traditional lenders (banks or financial institutions) and government agencies offer agric loans to farmers. Fortunately, the government’s agric loans come with low-interest rates and other subsidiaries that help farmers earn a profit.
Besides that, the government acknowledges the efforts of these farmers and their contributions to food security in South Africa. This is one reason they can get low-interest rates on their agric loans.
What are the requirements for agric loans in South Africa?
All financial institutions have requirements for various types of loans they offer. Agric loans also need borrowers to meet some requirements. However, the requirements for agric loans differ across financial institutions.
The following contains some requirements for agric loans in South Africa:
- Be a South African citizen or have a permanent resident
- Have a good credit record
- Present a coherent business plan
- Have collateral for the loan
- Be capable to afford the repayments on the loan
Which bank is best for agriculture loans in South Africa?
Land Bank has designed a credit line called Financing for Farming and Agri-Enterprises in order to assist South African farmers in their financial needs. With this loan, you can buy a farm or machinery that you will need to make it operational. You can visit the bank to start your loan application process
What are the things I can do with the farm loans?
Agric loans surely support farmers’ activities on their farms. There are some things you can use your agric loan to accomplish.
The following are what you can use your agric loan to accomplish:
- Agric loans can help you purchase the land you need to build your farm
- You can use it to cover the operating expenses of the farm
- Pay marketing costs for effective sales of the farm products
- Expand your current farm and invest more into it
How can I qualify for agric loans in South Africa?
Financial institutions have different criteria to qualify for their loan programs. This goes across all financial institutions in South Africa. And you must meet those criteria for you to get the loan.
The following are what you must meet to qualify for the agric loans in South Africa:
- Have a good credit score. Before any lender will give you any form of loan, you must have a good credit score. Especially credit scores from 600 and above
- The lender may also ask you to provide a business plan before considering you for an agricultural loan
- As an applicant, they might assess your eligibility based on your business operations experience on a farm
- You can get an agric loan if you own a farm and need emergency funding. Especially when you suffer a loss in production because of some circumstances beyond your control. They may grant you an emergency loan
How can I apply for agric loans in South Africa?
While applying for any loan you prefer, you must know the right procedures to take for your chosen lender. The procedures for loan applications vary across financial institutions.
The following are how you can apply for agric loans in South Africa:
- Your local bank can offer you an agric loan. It’s easier for your current bank to give you agric loans than from a bank you don’t do business with.
- Through direct and guaranteed loans for farmland from the government. There are government agencies that help farmers with cash to have profitable businesses.
- There are some agric unions in South Africa. They act as a mouthpiece for farmers in South Africa. They are;
- Agric South Africa
- National African Farmers’ Union (NAFU)
- Agricultural and Farmers’ Union Service
Belonging to any of the unions above will probably increase your chances of getting agric loans in South Africa.
Note: Ensure you understand the details of your agriculture loan before you sign. Make sure that there are no hidden costs in the agric loan.
How can I get an agricultural loans with bad credit?
Farmers who direly need loans and do not have a good credit score can get agric loans. A good credit score earns better interest rates. However, serious farmers can repay their loans and interests from their farm products.
The following are how you can get an agric loan with bad credit:
- Through a government agric loan program. Sometimes they check your credit score but also look at your background in the farming industry.
- Get a cosigner. Your cosigner has to possess a good credit score. They will hold your cosigner responsible if you cannot repay the loan.
Understanding the current economic situation world over. Farmers must make the right moves at the right time. These go down to making the right decisions. This is because what works for Mr. A might not work for Mr. B. As a farmer, you must not go for an agric loan because other farmers are going for it. Ensure you are financially fit to repay the agric loan before you get it. This is because failure to repay the loan will worsen your financial situation.