Purchasing farmland is a major investment, and choosing the right financing can make a huge difference, not just in getting the deal done but in setting yourself up for long-term success. Two of the most common options for farmland financing are private lenders and loans from the Farm Service Agency (FSA). Each option has its own pros, cons, and ideal use cases.

Let’s take a look at a few factors that differentiate private lenders from the loans offered by the FSA!

Larger Loan Limits

One of the biggest advantages of working with a private lender is the larger loan limits they can provide. This is especially helpful for buyers looking to make larger purchases or even finance some of their operating equipment with their loan. 

While FSA loans are fantastic options for first-time purchasers, buyers looking for a bit more purchasing power might consider looking to the private sector to finance their land acquisition. 

More Flexible Loan Options

Another way private lenders differ is in the flexibility of the financing options offer to buyers. Unlike FSA loans, which are subject to USDA guidelines and program structures, private lenders can customize loans to fit a buyer’s individual needs. 

For example, private lenders can offer fixed or variable interest rates along with options to dictate the term length, amortization schedule, and repayment structure that work best for the buyer’s specific circumstances.

Potentially Faster Turnaround

Some lenders like Conterra offer unique programs to provide buyers with loans on a much quicker timeline than those provided by the FSA. For example, Conterra’s Scorecard Program. According to Frantzis, applicants only require a few years of tax returns and balance sheets to receive a decision on their loan application within 24 hours. 

Many private lenders place a focus on making the lending process as easy as possible for their clients to allow them to focus on the day-to-day responsibilities of their ag operation. 

If your dream property or business plan requires more than what the FSA can provide, consider looking into a private lender. They’re especially valuable for experienced land buyers, investors, or those making strategic growth moves in agriculture.

Have more questions about land loans and the options available to you? Get in touch with your local Land Professional today!