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Knowing which tools you need goes far beyond equipment
Starting up your own operation can feel overwhelming.
At AgWest, we specialize in providing financing and related services to farmers, ranchers, agribusinesses, commercial fishermen and timber producers. We understand the challenges YBS producers face and we’re committed to the long-term success of every customer we serve.
How to apply for a business loan
Getting a business loan for an agricultural, forestry or a fishery operation can be different than a typical mortgage application or opening a credit card. Check out the information and resources below for an overview of what you’ll need to start your process.
The business plan is a road map to show how you will move from where you are today, to where you want your operation to be in the future. The plan shows a lender that you’ve thought seriously about your goals and plans for the business and you understand all parts of your operation.
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Lenders typically require a down payment for new purchases because it lowers the risk should you default, especially if you fail to make payments in the early years when more is owed on the loan. The larger the down payment, the less you pay each month in both principal and interest. Down payment assistance programs are available for young, beginning or small farm producers who qualify.
Collateral is simply an asset that lenders accept as security for a loan. The types of collateral typically used to secure an ag loan include a home, real estate, farm equipment, livestock, inventory or crop production.
A credit score is a number lenders use to estimate risk. Experience has shown that borrowers with higher credit scores are less likely to default on a loan. The three major credit reporting agencies – Transunion, Equifax and Experian – don’t necessarily use the same scoring software, so don’t be surprised if the scores they generate are different.
What parts of a credit history are most important? Here is a breakdown of the approximate value that each aspect of your credit report adds to a credit score calculation.
35% -- Your Payment History
30% -- Amounts You Owe
15% -- Length of Your Credit History
10% -- Types of Credit Used
10% -- New Credit
What is a good credit score? Credit scores (usually) range from 340 to 850. As your score climbs, access to credit typically increases. Borrowers with a credit score over 700 are typically offered more financing options, but don’t be discouraged if your scores are lower; there may still be a loan product available to you.
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Useful financial tools and calculators
Use these powerful tools to estimate mortgage payments, develop a savings strategy for your business, or find your breakeven on a mortgage refinance.
Learn moreDo you have the financial information you need to apply?
Lenders request, and in most cases require, financial statements to accompany your request for credit. Financial statements show you have a detailed understanding of your business and its capacity to repay the loan. Wise business owners use financial statements in combination with production records to identify strengths and weaknesses in the operation. The three most common financial statements include a balance sheet, income statement and cash flow budget.
Learning Resources
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Balance Sheet
The balance sheet provides a snapshot of the business’ financial position at a specific point in time. It consists of three main parts: assets, liabilities, and owner equity. The balance sheet helps business operators evaluate important data and metrics, observe trends and plan for the future.
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Income Statement
A business income statement, also called a profit and loss statement, is used to measure revenues, expenses, and net profits over a defined period of time, typically a year. Income statements can be used to determine income tax payments, evaluate potential for expansion and analyze loan repayment.
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Cash Flow Budget
The cash flow budget summarizes cash inflows, outflows, balances, and loan activity for each month. It is useful in determining the need for operating lines of credit to cover cash flow deficits or the feasibility of making new investments.