Getting a loan is an uphill task that requires a solid plan, documentation, and hard work. But if you are determined to seek out the financial backing for your livestock business success story, it can be done. Many livestock businesses are turned down by financial institutions, especially micro-finance institutions (MFIs), because they lack the documents and collateral needed to secure credit facilities. You need to have your documents in order, keep your business plan up-to-date and have things ready in case you need to be able to secure a loan as soon as possible. Here are some tips on how to get a loan for livestock to support your business growth.
1. Choose your Lender Wisely
You should approach a lender that has been in the business for some time as it means they have a lot of experience in the industry, and they will have better underwriting standards. Ask other people if they have had positive experiences with them before you decide to go for their services. This will help you determine the best livestock lender for your business.
2. Understand the Qualifications of a Lender
You need to be comfortable with the terms and conditions of a loan before you sign on the dotted lines. Most lenders will ask you to agree that they can take collateral from your livestock, crops, or anything valuable to your business should you default. Read up on their terms and conditions as well as their loan applications. Some lenders will allow you to save more money for your business through an excellent reputation, whereas others may not offer this option.
3. Get All of your Documents in Order
Be ready to present your documents to your lender. You should have proof of passport, green card, driver’s license, and a utility bill. Be sure also to have copies of all documents that you submit in case they are lost during the loan approval process. You will also need a business plan and financial statements; be sure that these are up-to-date and reflect accurate information about your business. You will also need collateral like land or livestock against the loan; provide certificates of ownership for both if you have them ready.
4. Know the Loan Agreement
If you receive a verbal agreement from your lender, make sure that this matches the document they sent you in writing. A verbal agreement will not be valid if it does not match what is stated in the document that you have received. This applies to any loan, including business loans for livestock production. There are certain agreements regarding loan agreements, and you need to read them thoroughly before signing any documents that come with them.
5. Stay up to Date
Keep your documents up-to-date and protected, just in case the lender wants to see them again. This includes business plans that may have changed since you submitted them. You should also keep your financial statements updated and not just for the last year; as long as you are working on a profit margin and have positive cash flow, you should update your financial statements regardless of when was the last time you did so. Your lender can use these updates any time they want, so be sure to keep them fresh.
6. Use Farming Equipment for Collateral
Bankers are more likely to lend money to businesses that have farming equipment tied to the loan, as this shows they have a good plan in place and understand their business debt needs. Equipment such as tractors, grain drills, and anything else used for your business needs should be secured against the loan.
7. Consider Different Financing Options
If you cannot get credit from a bank, you can try to get loans from lenders like benefactors or relatives. You should also try to secure short-term financing with other financial institutions that will allow you to pay them back within two years. This can help you build a good history with the lender and show that you can repay what you owe. Livestock financing options can be used for working capital for your business to help you run smoothly. You should have an updated business plan and a solid plan to get the livestock financing you need.
8. Ask Questions Before Taking Out a Loan
Make sure you ask all the questions you want to be answered before signing your loan application. You should also know how much time you have to pay the loan back, especially if you ask for a livestock financing loan. Most lenders will have different terms and conditions, so make sure you read all of them and understand them before agreeing to take out a loan.
9. Shop Around
Make sure that you negotiate your best deal before taking out a livestock financing loan, as some lenders will be better than others in your area. Before choosing a lender, shop around and compare their rates, fees, and other costs. You will also want to get a second or even third opinion on your financial statement to make sure you have been using them correctly.
Conclusion
There are many options when it comes to livestock financing and loans. To get the best loan for your business, you need to know your options. You should research and compare the different kinds of loans you can get before deciding on one. There is no perfect solution for you; as long as it has a low-interest rate and manageable terms, you will be able to make this work for you.
Amanda Byers is a graduate of Columbia, where she played volleyball and annoyed a lot of professors. Now as Zobuz’s entertainment and Lifestyle Editor, she enjoys writing about delicious BBQ, outrageous style trends and all things Buzz worthy.
