If purchasing and raising livestock is part of your agribusiness model, you’ll want to understand livestock loans.

These are specialized lending solutions tailored to the growth goals of farmers and ranchers and the seasonal and cyclical nature of their revenue streams. In many cases, they may offer lower interest rates, longer maturities, and more lenient collateral requirements than traditional financing products. Whether you want to expand your herd, invest in a breeding program, or cover day-to-day operational expenses, a livestock loan can provide the capital you need on workable terms. Below, we offer a few facts and action items to help you make the right decision for your agricultural enterprise.

Types of Livestock Loans

Livestock loans come in many forms. Some common types include feeder loans, which enable farmer-feeders to purchase weanlings, facility loans to help build or repair farm buildings and equipment, and operating loans, which are designed for shorter-term costs like feed and veterinary care.

Eligibility Requirements

While specifics vary by program and lender, most borrowers will need solid credit, industry experience, and ample cash flow. In assessing your finances, many lenders want to see a debt service coverage ratio (DSCR) over 1.2. Some livestock loans are secured by the livestock itself, while a blanket lien on farm assets may secure others.

Application Process

Expect to submit a formal application along with financial statements, tax returns, and other supporting documentation. The lender will review your materials, run your credit, and evaluate your financial position. If the loan is secured by livestock or other assets, an appraisal may be ordered. Then, if you’re approved, you’ll sign an agreement and get the funds.

Tips for Obtaining a Livestock Loan

To boost your chances of getting approved, maintain strong credit by paying bills on time and keeping balances low, and have a detailed business plan that clearly outlines your needs and goals. Additionally, explore USDA-backed loan programs designed for farmers who can’t qualify for conventional financing. These lenders understand the unique challenges and opportunities of livestock farming.

Ready to Start?

Contact our team for more individualized advice on taking your agribusiness to the next level.