Growing your farm can be a difficult experience if you do not have enough capital or access to financing. As an agri-preneur, you would want to expand your business, pay staff, manage your business operations, buy new equipment and maintain existing ones, but getting the money becomes a challenge. Your business needs financial assistance for growth and expansion, and this financial assistance can come in the form of a loan.
Loans are taken for various reasons such as maintenance of business operations, business expansion, purchase of inventory or business equipment, etc. Loans are easy to obtain from financial institutions and informal lenders. They can also be obtained from other sources such as public funds, private investors, credit unions, etc. Agribusinesses are provided with different easy access and available loans due to the demand for agricultural products.
Growing your farm is important because the demand for food and other agri-products is increasing, and farmers need to meet this demand through increased production and marketing. Therefore, an agribusiness owner needs to obtain a loan for increased production.
The loan obtained can be useful for the following purposes:
- Purchase of farm equipment
Farm equipment of high quality are necessary for growing your farm because they are dependable and durable. This will enhance effective and efficient farm activities, thereby enabling an easy and faster production process. However, these equipment are somewhat expensive to purchase. To purchase equipment such as a tractor, refrigerator, storage bin, etc, you need financial assistance such as a loan.
- Working capital
Often, it is not enough to have the capital for the purchase of goods or farm inputs before starting a project. There is a need for capital to maintain the day-to-day activities until your business breaks even. Working capital is sometimes a short-term loan to handle financial waves from daily operations at the start of a business. Working capital can be paid off with profits earned from the business after the agreed period. To grow your farm, you need a loan for working capital.
- Diversification and expansion
It is easier and more beneficial to diversify in agriculture than other businesses. Farmers are advised to combine livestock farming with crop farming for sustainable farming and effective utilisation of waste. However, diversification and expansion of businesses require capital, which can be provided through loans. Loans will facilitate the achievement of your business’ vision and expansion goal.
- Employ workers
You can increase your rate of production and reduce losses by hiring workers that can handle some operations. Obtaining a loan will help you employ these workers and achieve maximum production without financial and physical stress.
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