• Janine Russell

Getting funding for your small farm

Updated: May 14

We've already talked about how small farms can get into trouble but what about getting funding for your small farm? If you're ready to get started and need a bit of help to get you there, finding a funding option may help. How do you get funding for your small farm, you ask? Here are 5 ways to find funding for your small farm in different areas.


Crowd funding:

Crowdfunding is sourcing various amounts of capital from a large number of individuals to finance a new business venture. You make use of your network and the network of the people you know through social media sharing, crowd funding websites and getting the words out about your venture. You can be creative in how you structure the return of funds. Maybe it's just a t-shirt or a discount on items or maybe you pay back all the loans as they came in. Whatever way to structure it this way is very fluid and feels very community funded.


So, if you have a lot of friends, neighbors, or a large family that want to support your efforts then crowd funding might be a great option for you.


Small business loans:

There are many small business loans that are structured for various types of business, including farms. If you have some collateral to put up for the loan then a small business loan might be a good option. You may not have to put up collateral but instead have to give a personal guarantee (which is a legal promise to repay the loan).


This is a more traditional funding option but it isn't for everyone.


Grants:

If you are great at research, writing and have some time on your hands, a grant might be a great option for you. There is a lot of research and time needed to invest in this route of financing. The great thing about this option though is that you don't have to pay it back.


The downside of grants is that there is the potential that you won't get awarded the funds. So, you should definitely have a backup plan.


Micro-loans:

A micro-loan is an alternative funding option for those who don't need a whole lot of capital to get started. Just as the names suggests they are smaller loans.



Too qualify for these types of loans you the financial institution will evaluate your ability to repay the loan. So you will need to have good credit, a solid business plan and possibly some collateral.


Bootstrap Financing:

Getting funding is a hot topic and it seems that all the cool kids are doing it but it might not be for you. Maybe you don't want to start your farm business in debt (that's wise) or maybe you don't have great credit or collateral. Whatever the reason you can find alternatives to borrowing a lot of money.




Bootstrapping is just using your own capital to start your farm. That could be through working a second job and your partner(s) run the farm or vice-versa. Maybe you live on farm and work part-time for the farm or the other job. This is a great way to start out in farming without starting out in debt. Truthfully, many farmers are bootstrapping their farms even when they are bringing in a profit.


More bootstrapping options:

If you don't mind using your own capital to secure a loan then these options might be for you. If you have a home and don't mind using it for collateral you could use a HELOC (Home Equity Line of Credit) or use a personal or small business credit card to fund your farm business. I put these last because these are putting your in a difficult place if you don't get a great start on your farm. They often come with a higher interest rate and therefore a higher risk to you.


So there are a few funding options for you to look into. It really comes down to your risk tolerance and your specific situation. Below are some other links to find other information as you start your farm.


As always, we wish you the best of luck in your agricultural venture and Happy Farming!


Here are some additional resources that might help you if you get started.

Crowd funding success

Keys to success in Value-Added Agriculture (PDF)

Agriculture alternatives

Organic cost share program

Finding micro-loan funding

Value added producer grants


Worldwide Funding Options:

US funding

US grants and loans


UK Funding for small businesses


Finding funding in the EU


Farm grants in Canada

Farm funding in Canada


Finding farm funding in Africa


Latin American farm grants

More Latin American & Caribbean farm grants


If you would like information on how to keep better records and have visibility into your farm profit take a look at Farmbrite!




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