Farm & Agriculture Business Funding

In March you buy seed, fertilizer and fuel, repair the planter and pay the first of the seasonal crew. The crop you are paying for will not be sold until late summer or fall, and whether it brings a good price depends on weather, pests and a market you do not control. Farms carry more uncertainty between the first expense and the final check than almost any other business.

Agriculture includes row crops, orchards, vegetables sold at farm stands and markets, nurseries, dairy, poultry, livestock and value-added products like jams or cheese. They differ widely, but all share a calendar-driven cash cycle and heavy, expensive equipment.

This page looks at how cash flows through a working farm and how owners use outside funding, with attention to the risks.

The planting-to-harvest gap

Inputs such as seed, fertilizer, chemicals, irrigation supplies and fuel are bought before revenue arrives. Labor comes in waves, with planting and harvest crews being the largest. Livestock operations feed animals year-round, so feed is a continuous cost, with revenue coming in when animals are sold or products are marketed.

Direct-to-consumer farms, with stands, CSAs or farmers markets, bring in cash more frequently during season but still depend heavily on weather and foot traffic. Wholesale to restaurants, grocers or distributors often comes with invoices paid after delivery.

• Seed, fertilizer, feed, bedding and crop protection
• Fuel, repairs and parts for tractors and implements
• Seasonal and harvest labor, including housing or transport
• Irrigation, greenhouses, cold storage and packaging
• Insurance, leases, property taxes and veterinary costs

Equipment: buy, lease, used or custom hire

Tractors, planters, sprayers, balers and harvesters are major purchases, and a breakdown at a critical window can cost a crop's worth of timeliness. Many farms buy used, share equipment or hire custom operators for specialized tasks.

Equipment financing spreads the cost over a term and uses the equipment as part of the security, which suits long-lived machinery. Match the term to the machine's useful life and your realistic use hours. For a mid-season repair, quick working capital can keep the operation on schedule.

Weather, prices and risk

Farm income depends on factors a business owner cannot control: drought, floods, frost, disease and market prices. Crop insurance and diversified products can reduce risk, but not eliminate it. Be conservative when sizing any funding against a crop that has not yet been harvested.

Think about worst-case scenarios. If the crop yields 70 percent of expectation or prices fall, can the operation still service the funding? Repayment schedules that are heaviest at harvest suit a farm better than ones that draw cash daily through the winter.

A hypothetical example

Say a vegetable farm with a farm stand and wholesale accounts needs $28,000 for seed, plastic mulch, irrigation parts and spring labor. Expected sales through the season total $120,000, concentrated June through October. A hypothetical working-capital product with a total payback of $33,600 over eight months would cost $5,600.

If repayment is drawn daily from April, the farm is paying before its first sale. If instead the schedule starts when deposits are flowing, it may fit better. A line of credit that is drawn in spring and repaid in fall could cost less still. Terms vary by funding partner and underwriting, and approval is never guaranteed.

Farm stands, markets and card payments

Direct sales mean a steady stream of small transactions, often at remote locations with spotty signal. Card acceptance at stands and markets requires reliable mobile terminals and an offline plan. Fidelity's card-processing partner, PayPilot by MCCPS, offers statement review and competitive pricing, along with modern terminals and POS integration.

Certain agricultural programs and loans exist through public agencies, and some may fit your situation better than private funding. Explore them as well, and confirm details with the relevant agency or an advisor.

1. Build a month-by-month cash plan from first expense to last sale.
2. Identify your worst-case yield and price and test repayment against it.
3. Separate equipment purchases from seasonal operating needs.
4. Check public agricultural programs that may suit your situation.
5. Pull bank statements and records of past seasons.

Working with Fidelity Funding

Fidelity Funding is a broker. You fill out a short application, we run a soft credit pull for the initial review, and a specialist reviews options from our funding partners with you. Decisions often come within hours and funding often within 24 hours once approved, though timing varies. Share your seasonal calendar so the structure fits. Start your application when you are ready.

Marketing and diversification as cash flow tools

Selling through more than one channel reduces risk: a farm stand, a CSA, restaurant accounts and wholesale each pay on different timelines. Pre-selling shares or standing orders brings in cash before harvest. Value-added products can extend your season. Diversification will not remove weather risk, but it can smooth the cash curve and reduce how much outside funding you need.

This article is for general information only and isn’t financial, legal or tax advice. Funding approval, amounts and terms are set by funding partners and depend on underwriting.