Finding agriculture loans for a container farm can be tiring if you don’t know where to look. With many opportunities spread across various sources and web pages, it can be challenging for an entrepreneurial farmer to find funding sources for their growing operation. In this article, we’ll describe some options that might make purchasing a hydroponic container farm more affordable and how you can find the funding that fits your needs.
Agriculture Grants
Grants are federal funds that individuals and businesses apply for to start or expand their businesses. For the 2023 fiscal year, the USDA has allocated over $23.7 billion for grant recipients. Unlike agriculture loans, grants do not typically have to be repaid. That makes them a significant first step for farmers looking for funding. The following are a few grant options that warrant your attention.
Specialty Crop Block Grants
The USDA is interested in leveraging American farmers’ ability to produce specialty crops. Specialty crops are “fruits and vegetables, tree nuts, dried fruits, horticulture, and nursery crops (including floriculture).” Farmers willing to produce these crops and enhance their market competitiveness are eligible for grants through the Specialty Crop Block Grant Program.
Applicants must describe how their envisioned project potentially affects and produces measurable outcomes for the specialty crop industry and the public rather than a single organization, institution or individual. The USDA has allocated grant money to each state’s department of agriculture. Look for more information regarding this opportunity by searching for your state’s department of agriculture.
Value-Added Producer Grants
This grant helps farmers create products, expand marketing efforts and increase farm income. If you’re a beginning farmer, you may also receive priority. Other groups that may be eligible for priority are:
- Beginning farmers or ranchers
- Socially disadvantaged farmers or ranchers
- Small or medium-sized farm
- A ranch structured as a family farm
- Farmer or rancher cooperative
- Proposing a mid-tier value chain
The grant accepts new applicants in early spring. You can find more information on the grant’s USDA webpage.
Agriculture Loans
With the 2018 Farm Bill, the USDA increased loan amounts for farmers. This trend has continued, and for 2023, there’s money budgeted for over 35,000 direct and guaranteed loans, totaling more than $10.4 billion. That’s a big opportunity for any farmer, but it also makes it easier for hydroponic farmers to get the capital required to purchase a container farm.
While not an exhaustive list, here are a few agriculture loan opportunities that might interest you and your growing operation. Our first two loans will be from the U.S. Small Business Administration (SBA), and then we have two further options from the Farm Service Agency (FSA).
Standard 7(a) Loan
These agriculture loans are the U.S. Small Business Administration’s (SBA) most common loan program, which provides financial assistance for businesses that meet special requirements. These are used for real estate purchases but can also help farms access short and long-term working capital, refinance the debt or even purchase furniture, fixtures and supplies. For more information regarding 7(a) agricultural loans, the U.S. Small Business Administration has a page that may answer your additional questions.
SBA 504 Loans
SBA 504 loans are valuable funding sources for equipment or real estate purchases for small businesses. They have term lengths of 10, 20 and 25 years. You can use them for purchasing fixed assets (buildings, equipment and some real estate). Notably, they cannot be used for working capital, to buy inventory, repay or refinance debt, or invest in rental real estate. These loans also require you contact a Certified Development Company. That’s a nonprofit organization responsible for processing your application, determining financing, and sending the completed loan package to the SBA. Find more information regarding 504 loans on the SBA’s webpage.
Direct Farm Ownership Loan
Farm ownership loans offer complete funding for farmers to purchase or enlarge family farms and expand their operations. Financed and serviced by the Farm Service Agency, these agriculture loans are an asset for farmers looking to own their farms. However, it has more requirements than some of the other agriculture loan options listed in this article. You can find a list of requirements and other relevant details about the direct farm ownership loan on the Farm Service Agency’s site.
FSA Microloans
Microloans are smaller, more flexible loans given to small farms, specialty crop producers, and community-supported agriculture projects. These loans explicitly mention hydroponic growing operations, making them an excellent choice for those looking to invest in container farming. Two types of microloans are available for lessors to apply for: Operating microloans and farm ownership loans.
Operating microloans can cover start-up expenses, operating costs and more, helping farmers deal with operational costs. They can also cover marketing expenses for farmer’s markets.
Farm ownership loans give farmers funding to purchase a farm or farmland, enlarge existing farms, construct buildings or renovate existing structures and implement soil and water conservation practices. The Farm Service Agency’s webpage provides more information regarding microloan opportunities.
Agriculture Loans and Grants Summary
Getting over the hump to buy your container farm can be difficult, but once you’re over that hill, you’ll be glad you did. You can look forward to producing fresh and nutritious produce quicker than if you had the fields right in your own yard! Finding the agriculture loans and grants that can help you make that dream a reality takes a little effort.
Have questions? We have answers! Contact us for more information.
