Farming has been a traditional occupation for majority of the population in India. The Indian agricultural sector is not restricted to traditional farming. It also involves horticulture, silk farming, aquaculture, floriculture, apiculture, and eco-tourism. However, the financial needs of all these farm businesses could vary significantly. Traditionally, most agricultural businesses are passed down families to be inherited. However, with the economic boom since the “Make in India” initiative, many people are motivated to venture into the farming business.
Things that could benefit the farming business:
Some of the things that could benefit the farming business are mentioned below:
Ecosystem services include products such as food and water, regulation of flooding, control of soil erosion, etc. These services can benefit the overall health of your farm and hence can also improve the quality of the produce. These benefits to your farming business can allow you to obtain greater profits.
Nowadays, powered machinery has replaced the work carried out by manual labour. By using modern machinery in your farm business, you can greatly boost the productivity of your business.
Bench marking will help you analyze your farming business performance. Once you set a benchmark, your goals are clear to you and you tend to work towards those goals. This can gradually increase your productivity, and hence profits. Therefore, regular bench marking will help you identify your areas of potential weakness as well as your strengths. This will eventually improve your overall business performance.
At times, what stops you from adding additional machinery or other inputs is the lack of financial resources. This can easily be dealt with in the current times. As a result of various advancements in the Banking and Finance sector, availing a business loan has become a comparatively hassle-free process. You can apply for a business loan online from the comfort of your home. Instant approval and quick disbursal of the loan amount are some of the added benefits of availing a business loan. You can also consider making use of various government schemes to finance your farming business.
However, there are a lot of expenses involved in starting or maintaining a farm. This includes the cost of fertile agricultural land, farm equipment, fertilizers, seeds, labor costs, etc. Thankfully, the Indian government recognizes the need for such expenses and has introduced several schemes and subsidies in this regard. These government schemes enable several farmers and farm businesses to qualify for priority sector lending at minimal interest rates. As a result, today, any new farmer in India can easily avail a farmer loan.
Read further to know about the different steps to get loan for farm business in India
1. Know Your Financial Needs
Depending on the type of farming you are planning to start or have already started and planning to expand, the financial need for your agriculture loan will vary. Hence, before approaching any bank or financial institute make sure you assess all the financial need for your respective farm. This may include the cost of seeds, fertilizers, farm machinery and marketing of your farm products. These calculations will have you take the minimal possible debt.
2. Get Your Documents Right
Most banks and financial institutes are very particular about documentation when it comes to granting any business loan. Since, in a way you would be availing a business loan to expand your farm infrastructure, you would be required to have all your documents in place. Mostly, the following documents would be required while applying for a farm loan-
- Identity proof- Aadhar Card, Voter ID Card, Driving License, etc
- Residence Proof- Electricity bill, Telephone bill, Passport, Ration Card, etc
- Property Papers- Proof of owing/leasing of the agricultural land, revenue receipts, etc
- Business Plan details (optional)
- Enrollment proof in any government schemes
- Kisan Credit Card
While these are just a few documents that you might be asked to present at the time of applying for farm loans, the list may vary depending on one loan provider to another.
3. Know Your Eligibility
Irrespective of the type of farming you do, all kinds of farmers (small and marginal, tenant farmers or sharecroppers) are eligible to apply for farm loans. The minimum age requirement for an agricultural loan is 18 years, while the maximum limit extends to 65 years.
4. Compare the Interest Rates
Generally, business loans are granted at an interest of 9%-18%. However, in the case of an agricultural loan, the Indian Government offers subventions to the farmers. Thus, courtesy of these subventions, your farm business loan’s interest rates could easily come down to 7%-4% per annum. Furthermore, as per the 2019 budget, farmers can now enjoy 2% subsidy on short-term farm loans up to INR 3,000,00. This subsidy could help further bring down the interest rates on loan for farmers. Such profitable subventions can be availed when you opt for an agricultural loan from Public Sector Banks, Co-operative Banks, or Regional Rural Banks. Depending on the type of farming you have and the total amount required as a loan, the interest rates would further vary from bank to bank. Hence, make sure that you compare the interest rates offered by different banks and money lending institutes to avail farm business loan at the best possible rates.
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5. Apply Online
Once you have gathered all the necessary documents and chosen your loan provider, all is left is to apply for your business loan. Most loan providers offer online application portals, by virtue of which you can now apply for a business loan online from the comforts of your home. Once you submit your documents, your application would be assessed by the loan provider and you would be intimated of your loan approval status within a week.
For further information about farmer loan, get in touch with our representatives at Finserv MARKETS. The Bajaj Finserv Business Loan comes with exclusive offerings at zero collateral. Opt for a business loan using the business loan app by Finserv MARKETS, to enjoy fast online processing and instant disbursal of the loan in your bank account. Apply now and enjoy exclusive offerings such as unlimited withdrawals, flexible part payments and easy access to value-added services on your business loans.
Read more on how you can take full benefit of a business loan.
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