Get farm loans in South Africa and grow your business
Farm loans are also called agricultural loans or agribusiness loans. If you’re a South African farmer who needs a financial boost with your business, then you’re in the right place. The good news is an agricultural loan can fund a wide range of farming operations. Whether you’re a small-scale or commercial farmer, you can benefit from this flexible loan. Read on as we guide you on how farm loans work and the best way to get a farm loan in South Africa.
What is a farmer personal loan?
A farmer personal loan is a lump sum of money that can be used to meet a wide range of farming needs. As the name suggests, this personal loan is for many farm-related purposes that may include:
- Buying or leasing land;
- Expanding farming operations;
- Transporting produce and other farm products;
- New machinery and equipment;
- Improving cash-flow;
- Consolidating current farm loans; and
- Funding other day-to-day farm operations.
In short, agricultural loans help you to manage your farm better, and this is a good way to maximise profits. A lot of farming operations require money to run smoothly, and a farmer personal loan might be the thing to keep you on top of your business. CompareLoans.co.za links you with many South African banks and lenders that offer this type of loan. We invite you to browse our comparison tables above so you can find a farm finance solution that works for you.
How much can you borrow with a farm loan and for how long?
Farmer personal loans are term loans that are available to qualifying South Africans starting from R2000 up to R300 000. Usually, the amount you get mainly depends on your credit score and your income. These two factors are considered by the lender to decide if you’ll be able to pay back your farm loan. Loan terms are generally from 6 months up to 72 months. That means you can choose a flexible repayment plan that offers affordable monthly instalments.
What are the interest rates for farm loans?
In South Africa, the National Credit Act prescribes a maximum interest rate of 24.50%. However, some loan providers offer interest rates that are as low as 15%. The interest rate can even be lower, especially if you have an excellent credit score or if you’re taking out a secured loan. When you pay back your loan, interest is usually included in the monthly payments. The longer you take to pay back the farm loan, the more you have to pay in interest. On the other hand, if you repay the loan quickly, you avoid paying more in interest.
What are the benefits of farm business loans?
- You can start a farming business – Besides buying or leasing land, you’ll also need specialised equipment or machinery that is necessary for the industry. These help to ensure the success of your business.
- Improves farming operations – Whether you’re growing crops or breeding livestock, there are so many requirements needed to increase productivity. An agricultural loan helps you to cover all these short term and long term needs to keep things running efficiently.
- Allows you to grow your business – If you’re thinking of expanding your business, it means you’ll be taking on extra costs. If you have no savings and your budget can’t carry these additional costs, then a farm loan can be the perfect solution.
- They help to keep your farming business stable – Farming usually has its ups and downs, and this can seriously affect cash flow. Without proper cash flow, it may be difficult to keep the business going. However, a farm loan gives you peace of mind from knowing that you have a solid financial backup.
- They can be used to manage your farm debts – You can use the loan to consolidate any existing loans for your farming business. That leaves you with one account, which is easier to manage.
- Farm loans are personalised to match your situation – This flexibility allows you to choose the right monthly payment. You can also choose between a variable/linked rate and a fixed rate. In addition, the amount you can borrow and the interest rate you get can be tailored to your particular circumstances.
How do you choose the best farmer personal loan?
Pay attention to the following for best results when comparing and choosing the best farmer personal loan for your needs:
- How much you can borrow – It’s important to choose a lender that allows you to borrow as much as you need for your farming operations. This helps you to avoid applying for more loans in the future, which makes it harder to manage debt.
- Loan requirements – When searching for the best agribusiness loan, it is best to go with a lender who has requirements that are easy to meet. That also means a simple application and approval process that gets money into your bank account quickly.
- Interest rate – The interest rate is a crucial factor that affects the total cost of your loan. It also determines whether you’ll be able to afford the loan or not.
- Additional fees and charges – Interest is not the only thing the lender will charge you. Look for other charges and fees that increase the cost of your loan and go with the cheapest offer.
- Repayment flexibility – Find out if the lender will allow you to choose a flexible repayment schedule and monthly instalments that fit into your budget.
- Other loan features – These should be flexible as well. Important things to look at include early repayments with no extra fees, access to redraw facilities, and the ability to choose between a fixed and variable rate. Furthermore, other loans offer seasonal finance where you only pay back the loan during times when your business is bringing in money.
What do you need to get a farmer personal loan?
- Valid South African ID;
- A clean credit record;
- Bank statements for proof of income.
Sometimes loan providers may require you to provide a detailed business plan and security to guarantee the loan. The most important thing to the loan provider is that you should be able to afford the required payment when paying back the loan.
Use the farm loan repayment calculator to choose an affordable loan
Before you can apply for a farm loan, one last step we recommend at CompareLoans is using our farm loan repayment calculator to choose the best monthly payment for yourself. The calculator uses your loan amount and term to calculate the estimated monthly repayment amount. If you check the comparison tables above, results are displayed for each lender. That means you can easily compare loans, and by using the calculator several times, you’ll be able to make a decision within minutes.
What is the farm loan application process?
You can make an easy and fast online application for a farm loan starting from this page. Check the comparison tables above for the lender of your choice and then proceed to click their “Go to Site” button. Once you’re on their website, follow the guidelines provided. This usually involves filling an application form and uploading documents where necessary. Once you’ve submitted your farm loan application, you simply wait to hear back from the lender.
Tips on getting easy approval for a farm loan
- Check your credit report – If you know your credit score before applying, you will be able to avoid getting your loan application delayed or rejected. For example, if you have bad credit, you might have to apply for bad credit farm loans for your chances of approval to be higher.
- Choose the right loan – This requires you to understand the type of loan you want, the requirements, and whether the loan can meet your cash needs.
- Make sure you meet all the requirements plus more – Provide as much personal information and all required documents during the farm loan application process if possible. Any missing information might result in a rejected application.
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