Farm Finance

Farm Finance

Every Farm needs to search for external funding at one time or another. Financing your startup business or obtaining the money to grow your established Farm could be a difficult, protracted, process; and you still might not find or secure the funding that you need. Getting the correct funding under any circumstances will be challenging, whether you are looking for start-up funds, capital to grow your organization, or resources to carry on during the tough times.

  • The main source of funding for Farmes are banks and credit unions. The most common source of business funding is the owner, but established sources such as financial institutions and credit unions are next. That means your local bank is a great way to begin your search for funding for your Farm.

  • Grants for a Farm are few and far between. There are not too many business grants out there and most of the grants that do exist highlight specific groups, activities, or even regions of the country. However, there seem to be more grants available for Farmes that may be associated with the arts, culture or to explicit ecological matters.

  • You have to construct a strong Farm Business Plan. There is clearly no way around this and no shortcuts; anybody who could seriously think about funding your organization will want to review your Farm Business Plan. This should introduce your numbers, such as your profits statement, cash flow forecast and your balance sheet.

  • There has to be something in it for your lender. Your Farm Business Plan has to establish this. If you are trying to acquire a business loan, then it is obvious that the lender will acquire a percentage rate of return on their investment. A few potential investors might want more involvement, demanding an ownership percentage or involvement in the way your Farm is run. When you are creating your funding proposal you have to know which type of lender you are trying to entice and develop your Farm Business Plan accordingly to meet their needs and answer all of their questions.

  • You need to be willing to contribute financially. Assets are a big plus, particularly assets that investors will look at as security, but making your own monetary contribution may be demanded to secure the financing that you are trying for. Most government sponsored business loans and grants are dependent on a contribution, often of a set percentage of the funding being asked for.

  • The size and age of your Farm matters. The size of your business is significant in regard to how much the level of funding will cost you. If you are searching for a loan for your new venture from a bank or a lending institution, you are considerably more likely to pay an interest rate of more than 1.5% over the prime rate if you are requesting a smaller loan (under $100k) particularly if you have revenues of under $500k. You are also more likely to pay higher interest rates should you have a Farm with less than twenty employees and / or you do not have 10 years of suitable experience.

  • Farmes many a time have a considerably harder time obtaining financing than other companies. Therefore you are at a disadvantage as opening a Farm is treated as more of a risk than businesses in other markets.

  • You are your Farm from a financial point of view. Any complications with your personal financial history, like bad credit or a shortage of security, may knock you out of the running for funding completely. It is crucial that you attempt to straighten out your personal financial report, such as restoring your credit rating, before trying to get business financing, albeit there is some funding for those who do not have impeccable credit ratings. If you do not have a credit history or assets thanks to a breakup, because you are a recent migrant or because you are too young, or should you have a weak credit rating due to repayment issues, you could still find a bank that is ready to lend your business the money you need.

  • There is some specific business funding available exclusively for women. There are some sources of funding specifically for assisting women to begin and expand their Farm. If you are a woman seeking to start a Farm, or develop an existing small venture, loans are available; and maybe even the occasional grant.

  • You do not need a huge amount of cash to open a Farm. If you are looking for business start up funding, examine how you might downsize your objectives or break it into parts so that you are able to get your new enterprise up and running without a large infusion of external financing.

Some typical startup costs facing new business owners include:

  • Electronic equipment: computer, printer, scanner, photocopier, etc.

  • Vehicle.

  • Furniture and fixtures: desk, lamps, bookshelves.

  • Office supplies.

  • Reference books.

  • Supplies / inventory.

  • Manufacturing machinery and equipment.

  • Advertising: domain name, domain hosting, mailers, website design, etc.

  • Operating Space.

  • Licenses.

  • Permits.

  • Corporation fees.

  • Legal fees.

  • Security deposit for renting a business location.

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