A farmer may get agricultural loans to pay seasonal agricultural operations or allied enterprises such as animal farming, mushroom cultivation, or the acquisition of land or agricultural instruments. This form of loan also assists in the purchase of inputs such as fertilizers, seeds, pesticides, and so on, as well as in the hiring of labor for crop cultivation and harvesting.
Furthermore, agricultural loans cover the expense of acquiring land or agricultural instruments, storing and transporting produce, and the cost of plowing land for planting, weeding, and transplantation. Farmers can obtain an agricultural loan with interest rates starting at 7% p.a. and processing fees ranging from 0% to 4% of the amount borrowed.
Features Of Agricultural Loan
- End-use Accessibility: An agricultural loan can be used to cover a wide range of farm-related expenses, such as the acquisition of new lands or animals, or to manage running costs and other linked operations.
- Minimal Paperwork: In most cases, an agricultural loan may be obtained with very little documentation.
- Possible collateral: Both unsecured & secured agricultural loans are available, depending on loan amount and applicant profile.
- Several Sorts: There are various types of agricultural loans based on the ultimate usage as well as the payback period.
Get Agriculture Equipment Loan: Sundaram Finance Branch Locator
Types Of Agricultural Loans
The primary forms of agricultural loans issued by different banks and many other lenders in India are listed below.
1) Agriculture Term Loan
This loan refers to long-term loans of approximately 48 months issued by various lenders to fund agricultural expenses that are not typically seasonal. The loan proceeds can be used to acquire new or upgrade current gear, as well as to build solar panels and windmills. Banks often allow you a payback period of 3 to 4 years for this loan, allowing you to pay off the borrowed money in monthly/bi-annual/yearly payments at your leisure.
Checkout: Branch near you Shriram Transport Finance for Agriculture Equipment Loan
2) Kisan Credit Card - Retail Agri Loan
Kisan Credit Card/ Kisan Card is a suitable agriculture financing alternative for meeting short-term credit requirements, including crop cultivation expenditures, post-harvest operations, maintenance of farm equipment, and so on. The card is often accessible in the form of an electronic RuPay Card, which farmers may use to withdraw funds from ATMs to make the necessary purchase. As a result, it offers accessible loans to satisfy your everyday agricultural needs.
3) Loan for Allied Agricultural Activities:
Farmers who engage in related agricultural activities may apply for such loans when they need to obtain operating capital to pay their farming expenditures.
4) Farm Mechanisation Loan:
If a farmer needs working money to buy new agricultural equipment or improve their existing ones, such as buying a new tractor or having an old one fixed, they can apply for these sorts of loan programs.
5) Solar Pump Set Loan:
If a farmer is interested in minor irrigation projects & needs funds to purchase a photovoltaic pumping system, a solar pump set loan is the best alternative. The payback period for such lending plans might be up to ten years.
Checkout: Branch near you L&T Finance for Agriculture Equipment Loan
6) Forestry Loan:
This type of agricultural loan is used to cultivate crops that grow on trees. It may be used to clear undergrowth or wild trees, transform the barren ground into the cultivated area, prepare the land by installing water canals, and so on.
7) Horticultural Loan:
The agricultural loan is offered for the development of land to establish orchards or vegetable farms, clear of undergrowth or wild trees, modest irrigation operations, erecting boundary walls/fences, and other horticulture purposes.
8) Agricultural Gold Loan:
This loan is made available to farmers in exchange for the pledge of gold jewelry. It might be used for crop production as well as other agricultural uses. This loan has low-interest rates and allows farmers to access the value of their gold jewelry, which is normally sitting idle in the house or bank locker.
Checkout: Branch near you IDFC FIRST Bank for Agriculture Equipment Loan
What is the general eligibility for the agricultural loan?
- Individual farmers and joint cultivator owners who own a farm are eligible. Sharecroppers, oral lessees, Tenant farmers, and so forth. Tenant farmers are members of Self-Help Groups (SHGs) or Joint Liability Groups (JLGs).
- Residence of India
- Age of 17 to 80 years
- In general, should possess agricultural property or have access to agricultural land for certain purposes.
Checkout: Branch near you Fullerton for Agriculture Equipment Loan
Documents Required for Agriculture Loan
You may be requested to present the following papers when applying for an agricultural loan:
- Duly filled application form
- Security PDC
- Any other document mandated by the lender
- KYC documents
- Land/asset documents
Checkout: Branch near you Cholamandalam MS for Agriculture Equipment Loan
How can you apply for a Loan?
If you want to apply for an agriculture loan, it is best to do your research online and then apply for the loan of your choice by visiting the local branch of a lender. When visiting the branch, make sure you have the necessary papers with you to expedite the application process.
Prospective borrowers may also be able to apply for an agribusiness loan online through the official websites of some lenders. In this situation, you must go to the relevant website, click on 'Apply Now,' fill out the application form, and submit the requisite papers.
Irrespective of the method you use, the lender will check and accept your application. The loan money will be deposited into your account after your application is accepted.
Checkout: Branch near you Bandhan Bank for Agriculture Loan
Why Apply for an Agricultural loan?
A variety of agricultural loans are now available from a variety of lenders for the benefit of their clients. The following are the numerous uses for which you can obtain an agriculture loan:
- Purchase of agricultural machines and equipment
- Land acquisition.
- Projects in horticulture.
- Vehicle acquisition.
- Dairy unit establishment.
- Small poultry operations will be established.
- To meet working capital requirements.
- To meet seasonal demands.
- For the production of fish.
Union Budget of 2020-2021 For the Agriculture sector
Nirmala Sitharaman, Finance Minister, announced an allocation of Rs. 1.42 crore to the Ministry of Agriculture and Farmer Welfare in the Union Budget for 2020-21. This sum was set aside for the below proposals:
- PM sets a target of Rs. 15 lakh crore for agricultural finance in 2020-21. KUSUM will cover 20 lakh farmers for stand-alone solar pumps as well as an additional 15 lakh for grid-connected solar pumps.
- A village storage plan operated by Self Help Groups (SHGs) will be introduced.
- e-NWR will be linked to e-NAM.
- Construction of efficient warehouses on a PPP basis with the assistance of viability gap finance.
- To boost artificial insemination coverage to 70%.
- The capacity of milk processing will be increased by 2025.
- Indian Railways and Civil Aviation will establish "Kisan Rail" and "Krishi Udaan," accordingly, to facilitate the national cold distribution network for perishable products.
- A 200-tonne fish production target is set for 2022-23.
- Fishery expansion via 3477 Sagar Mitras & 500 fish FPOs
- To increase fisheries exports to one lakh crore until 2024-25.
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