By Emily Folk

Most business start-ups require a good deal of cash — more than most budding entrepreneurs have on hand. Aspiring farmers are no exception. Beginners need access to land, equipment, seeds, pesticides, fertilizer, water and a plethora of other things before they even begin farming. Consequently, the capital investment can be staggering. Farm equipment alone can cost $715,000 considering a used tractor in decent condition can cost $200,000 or more.

As a beginner farmer, it's highly unlikely you have that much cash lying around, even though some equipment manufacturers may offer discounts and rebates. Thus, the only possible solution is to find financing through a lender. Luckily, there is a myriad of options available to beginner farmers.

Local banks

Most banks have a commercial lending program. However, a few have loans specifically for agricultural businesses. Check with your local bank or credit union to see if they offer loans to beginning farmers. You might also search for banks online if you don't yet live in the area you wish to farm. However, online lenders may be reluctant to approve a loan for vacant land. Moreover, local lenders may require a 50% down payment and short-term loans.

Farm Credit Services

Farm Credit Services of America also offer loans to beginning farmers. However, they specialize in lending to the young, beginning and small farmers. In addition to loans, this organization also offers a development fund to those looking to expand their livestock facilities. This program includes specialized financial assistance, down payment financing and cash liquidity for start-ups.

Private Contracts

Both of the above loan options do require you to have relatively high credit scores to qualify. Plus, the later has age, experience and income restrictions. Thus, if you are older than 35 or have a credit score in the mid 600 range, you may have better luck with a private contract. Beginning farmer and land-link programs can connect new farmers with retiring ones to help you find someone from whom to buy the land directly.

Aggie Bond Programs

Most states have their own agricultural development program in the form of Aggie Bonds. These programs typically offer loans at lower interest rates than most banks or credit services. Plus, most are aimed at assisting beginning farmers. Moreover, many states offer this program tax-free. Although, some require beginning farmers to take management courses to ensure you'll pay back the loan.

USDA Beginner Farmer Loans

This option is a last resort for farmers who don't qualify for the aforementioned programs, but an option nonetheless. Current interest rates range from 1.5% to 3.375% with microloan interest rates currently set at 3%. This loan is especially helpful for beginning farmers who only need a loan of up to $50,000. To qualify, it's useful to have a business plan outlining expenses and income as well as a viable plan to repay the loan.

Microenterprise Lenders

Microenterprise lenders are nonprofit organizations dedicated to assisting those who are unable to attain loans from community banks. Typically, they offer smaller loans at higher interest rates. However, they also offer training, technical assistance and private financing programs to promote local agriculture. These lenders will be more helpful to you if you plan to maintain a smaller farm and repay your loan fairly quickly.

Additional Financing Options

There are very few grants available to beginning farmers and ranchers. However, they are still worth looking into. Search for grants and funding within your own state to find ones for which you might qualify. You might also search the USDA's database of federal grants and funding programs. While qualification requirements can be incredibly specific, you may just find you're eligible for one or two. Otherwise, you may have to stick with a loan or private contract.

About the author: Emily is a sustainability writer and avid gardener. You can read more of her work on her site, Conservation Folks, where she writes about helping tomorrow’s planet today.