Understanding farm loans: Uses, types, and how to apply

Running a successful farming operation takes more than hard work—it also takes reliable access to capital. In today's article, we’ll explore the key reasons farmers apply for finance, the types of business loans available, and how to go about applying—so you can find the right solution for your farm.

Key reasons to get an agriculture loan

A business loan can provide farmers with support across all stages of farming operations, including to:

• Grow and expand. Whether you’re looking to acquire more land, increase crop yield, or diversify into new crops, expansion requires a large investment, which can put a strain on your business's cash flow. A loan can give you flexibility to pursue growth opportunities without tying up working capital.
• Purchase or upgrade equipment. From mowers to ploughs, transplanters, and more, farming businesses rely heavily on machinery, which can be quite expensive. Financing helps you buy (or lease) it without the hefty upfront cost.
• Restock livestock. Farm animals are another key component of many agricultural businesses, with constant cycles of buying, breeding, and managing stock. A loan can help you replenish herd numbers after a sale or expand into new livestock categories—meeting seasonal demands without delay.
• Recover from natural disasters. Droughts, floods, and bushfires can have a devastating impact on farming operations, especially in Australia, where extreme weather events are increasingly common. If you find yourself facing damage to infrastructure or crop losses due to climate-related events, financing can help you get back on your feet. It can also support proactive risk mitigation, allowing you to invest in strategies like water-efficient irrigation systems and storm-proof structures.
• Innovation and sustainability. Sustainable farming is a growing priority—and for good reason. But it can require significant investments in innovative equipment, such as solar-powered irrigation systems and precision agriculture technology. Financing can help farmers adhere to sustainable practices while alleviating the upfront financial burden.
• Succession planning. Handing the farm over to the next generation is a major milestone—but it often comes with financial complexities. The right business loan can be a useful tool during the transition period, providing you with capital to cover legal costs, buy out family members not staying in the business, or simply manage cash flow.

Types of farm loans

Depending on your business goals and financing needs, there are several types of loans you can get for your farm, including:

Term loan

One of the most popular financing options for farmers is term loans, which provide you with a lump sum that you then repay over a fixed period, with a fixed or variable interest rate. These are typically secured and can be used for a range of purposes, from buying farmland and livestock to farm renovations, refinancing debt, and more.

Equipment loan

Equipment finance allows you to purchase business equipment—think ploughs, fertiliser spreaders, utes, shearing trailers, and more—while spreading the cost over time. There are three main types of equipment loans to consider: chattel mortgage, where the asset is used as collateral; hire-purchase agreement, where you pay installments to borrow equipment and ownership transfers after the final payment; and equipment lease, where you borrow and use a piece of equipment in exchange for periodic repayments.

Business car loan

Although you can use an equipment loan to finance vehicles such as utes, trucks, or off-road vehicles, another option is to get a business car loan. This is a way to buy a vehicle for your business while spreading the cost out over time. You own the vehicle from day one, but it's used as collateral for the loan.

Business line of credit

A business line of credit is a flexible way to borrow money for your business, giving you access to funds up to a set limit, with interest paid only on what you use. One of the key advantages of getting a line of credit loan is the convenience and flexibility, and business owners can use it for several purposes, like hiring seasonal labour, bridging cash flow gaps during pre-harvest, or simply covering day-to-day operational costs.

How to apply for a farm loan

Applying for a farm loan on your own can be time-consuming and stressful—especially when you're focused on running your operation. That’s where Valiant steps in.

Our platform compares loans from over 90 lenders to connect you with ones that understand the agricultural sector and offer finance options tailored to your unique needs. We manage the paperwork, handle the application, and help get your funding sorted—so you can stay focused on the land. Reach out today.

Tips for a successful farm loan application

If you're ready to apply for agricultural finance, here's what you can do to make sure you have the best shot at approval:

• Have a clear purpose for the loan. Knowing why you’re applying for financing—whether that’s to buy a new tractor or expand your herd—is key to finding the most suitable loan type and terms for your needs.
• Gather all the necessary financial documents. Lenders will want to review documents like your balance sheet and recent bank statements.
• Improve your credit score. Lenders will often check your business credit score to gauge how risky it may be to lend you money. Your credit history is particularly relevant if you’re applying for unsecured finance, and although less critical for secured loans, it’s still something to consider.
• Chat to someone who understands farm finance. If you’re not sure whether you’ll qualify for a loan, speaking with a lending expert could save you from damaging your credit score by applying before you’re ready.