If you are a farmer looking forward to growing or expanding your
agribusiness, you will need to apply for agribusiness loans. Also referred to
as farmer loans, farm loans or agricultural loans, it can be taken for a
variety of purposes. It includes buying farm property, updating equipment, or
starting your agribusiness. Upon receiving the application, it is carefully and
thoroughly assessed by the banks to check their merit. Most of the banks
usually lend to people who are Australian primary producers.
Things to keep in mind when applying for the loan
When looking forward to applying for agribusiness
loans in Australia, a few things
need to be borne in mind. It is important to ensure a strong loan application
with necessary documents to qualify. It means they must have a good credit
rating and a high income. Banks may be flexible with their policy depending on
several factors. The applicants need to show that they are into a low-risk
business but excellent chances of high profitability. Each loan is assessed
individually and there are no set guidelines for the same.
When planning to buy a commercial farm, the banks can lend
approximately 60 percent of the total land value. If a farm is not being
purchased, the LVR Ratio or the Loan to Value Ratio varies from lender to
lender. The borrowing power of the applicant is dependent on the loan product,
lender, and application strength.
If an applicant wishes to go for high LVR business loans in
Adelaide, he may have to
face a stricter lender criterion put forward by the banks.
The applicant also needs to prove his income as a lot will depend
on this factor before a loan is approved. Banks allow using existing and
projected income and the applicants can use tax returns, bank statements, and
cash flow projections to prove their income.
The banks demand for last two years tax returns and statements, so
it is important to ensure all documents are in order. If the borrower fails to
prove income evidence, he can go for low doc business loans. In this case,
significant equity is considered by the banks before lending.
It is better to hire the services of a professional loan broker
who can help to increase the chances of the application being approved.
