Best Financing Solutions for Agricultural Equipment Manufacturers

Agriculture is the world’s largest industry and one of its oldest, but it continues to innovate at a startling pace. Business is getting extremely challenging for farmers, and agricultural equipment manufacturers and dealerships are being forced to evolve to serve increasingly stressed farming operations. While farmers lean on agricultural equipment financing to purchase new or used farm equipment like planters, harvesters, balers, loaders, and even irrigation equipment, manufacturers also require financing programs to keep up with changing demands and realities of the industry.

In this article:

• The challenges in agricultural equipment financing that manufacturers and dealers face today.
• How manufacturers and dealers can use agriculture equipment financing and other loans to maintain profitability.
• How to get agricultural equipment financing, such as farm equipment loans, lines of credit, and more.

Challenges Facing Agricultural Equipment Manufacturers and Dealers

The world of commercial agriculture has changed immensely over the last 100 years, and today’s farmers and manufacturers face several new and pronounced challenges.

Market Pressures

Many of the most significant challenges faced by the agricultural industry are outside of anyone’s individual control. These include:

• Inflation: Farmers have been squeezed by a 15% annual increase in the cost of key inputs like fertilizers.
• Decreased profitability: Net farm income fell by $6.5 billion in 2024, making it the worst financial year for farmers since 2007.
• Growing trade deficit: The US agricultural trade deficit has continued to widen year over year.

Each of these factors has had a marked impact on agricultural equipment financing. U.S. tractor sales dropped significantly in 2024, and both the total number of farms in the U.S. and the size of those farms have declined over the past five years. That means there are far fewer borrowers in the market and less demand for agricultural equipment financing, putting additional pressure on manufacturers and dealers to provide more flexible financing solutions, used farm equipment financing, and leasing options for a smaller, economically distressed market.

Labor Shortages

On the other hand, significant labor shortages in the agricultural sector have driven a major need for increased mechanization. There are 2.4 million agricultural jobs in need of filling in a rapidly aging workforce, making technology extremely important for farmers.

While programs like AgDirect can support their need for agricultural equipment financing, manufacturers and dealers must respond to this demand by providing increasingly sophisticated equipment. Farmers are looking for autonomous, AI-powered machinery, and manufacturers must be able to invest significantly in their own research and development to meet this demand.

Sustainability

The impacts of climate change, like erratic weather patterns, more severe droughts, and major pest outbreaks, are forcing farmers and ranchers to adopt new tactics and approaches to agriculture. As farmers shift toward more sustainable practices to preserve the land and accommodate regulatory compliance, they require agricultural machinery to be more carbon-neutral and environmentally friendly.

Agricultural manufacturers can support this mission by offering electric and hybrid machinery, precision sprayers, machines optimized for minimal soil disturbance, more efficient irrigation systems, and more.

How Financing Can Help Farm Equipment Manufacturers and Dealers

Agricultural equipment financing and other funding options can help farm equipment manufacturers and dealers respond to these evolving market challenges in a number of ways:

• Developing new equipment: Financing can support research and development efforts, or acquisition costs for modern tractors, harvesters, balers, and more equipment to meet modern demands.
• Financing used equipment: Agricultural equipment financing can help you secure used farm equipment and offer customers more cost-effective options while maintaining profitability and positive cash flow.
• Expanding inventory: Agricultural equipment financing can help you stock a wider range of equipment to appeal to more customers.
• Improved efficiency: Agricultural equipment financing can help manufacturers scale production, maintain a steady supply chain, and fulfill bulk orders for their largest customers without depleting resources.
• Upgrading and expanding facilities: With financing, you can improve your production lines, invest in automation, improve operational efficiency, and open more factories or expand into new markets.
• Managing cash flow: Farm equipment sales can be cyclical and influenced by the seasons, so loans can give manufacturers and dealers some working capital in the offseason.
• Offering more payment options: Dealers may use loans to offer more flexible ag equipment financing solutions to customers with fixed rates or variable rates, or allow them to refinance existing farm equipment loans.

Types of Farm Equipment Loans for Dealers and Manufacturers

Financing programs can help farm equipment manufacturers and dealers respond to a range of challenges and stay on the cutting edge of a rapidly evolving market. But there isn’t a one-size-fits-all financing solution for every company. There are several types of loans you might consider, including:

• Agricultural equipment financing: Equipment loans are typically secured by the equipment itself, meaning if you default on the loan, the lender may seize the equipment. These loans may require a lower down payment and can serve as farm equipment financing with bad credit, since the collateral offsets some of the risk for the lender. Approval rates are higher on these loans and can be a good way for dealers to acquire used equipment or brand-name equipment like John Deere for resale.
• Term loans: If you need more than just farm equipment financing options, term loans offer more flexibility. These conventional loans provide a lump sum payment upfront that you must repay with monthly loan payments based on an interest rate. You can use these loans for any business purpose.
• SBA loans: These loans are backed by the U.S. Small Business Administration (SBA) and often have the most competitive rates, making them useful for manufacturers looking to invest in large-scale equipment production or expansion. SBA loans tend to have strict eligibility requirements, but allow you to use the funds how you see fit.
• Agribusiness loans: Loans designed specifically for the agricultural sector can help manufacturers increase production capacity and dealers stock a greater variety of inventory.
• Business lines of credit: If you need more flexible funding, a line of credit gives you access to revolving capital that you can use for equipment purchases, inventory expansion, or any unexpected expenses. You only pay interest when you withdraw from the line of credit, and once you repay what you borrowed, you’ll have access to the full loan amount again.

How to Get Financing

Whether you’re looking to get agricultural equipment financing  the process is fairly similar. Here’s a step-by-step guide:

1. Determine funding needs: First, you must determine why you need financing. Do you want to invest in research and development? Do you want to buy specific equipment to resell to customers? Do you want to hire more staff or open a new factory? The reasons you need funding will inform how much you apply for and how you draw up your business plan for your application.
2. Research and compare lenders: Depending on the type of financing you need, you can explore a variety of lenders. Some may have different types of expertise, so make sure you find a lender with the right experience in agricultural lending and that can offer competitive rates and loan terms that work for your business. Online lenders tend to offer faster funding times and lower qualification requirements while traditional lenders often have higher loan amounts and lower interest rates.
3. Gather documentation: When you’re ready to apply, gather all necessary documentation. Lenders may have different requirements, but usually you’ll need at least basic business information, financial statements, tax returns, and a business plan.
4. Apply: Many lenders today offer an online application, but you may have to apply over the phone or in person. After you apply, just wait for approval, underwriting, and funding.

Final Thoughts

The agricultural industry is going through significant, rampant change, and farming equipment manufacturers and dealers are on the front lines. Agricultural equipment financing and other funding options can help these businesses meet changes in demand and accommodate a future that is more tech- and sustainability-focused. With these funding solutions, you can keep your company on your financial targets.

FAQs

What are some of the challenges facing the agricultural industry?

The agricultural industry is the world’s largest, but it’s shrinking fast despite there being no dip in food demand. Farms are getting smaller, and it’s getting harder to find workers, making machinery more important than ever. Agricultural equipment manufacturers and dealers, therefore, are playing a crucial role in developing efficient, smart, sustainable machinery and offering agricultural equipment financing to help farmers afford new solutions.

How does a business qualify for financing?

Lenders use different criteria to determine eligibility for their loan products. While these criteria may differ depending on the type of loan, usually lenders consider a business credit score, financial stability, annual revenue, time in business, and collateral availability. Online lenders tend to have less strict requirements than traditional lenders like banks or credit unions.

Can you use agricultural equipment financing for infrastructure enhancements?

Depending on the loan structure and lender, you may be able to allocate some funds from an equipment loan to infrastructure improvements that support equipment storage, servicing, or operational efficiency.

How hard is it to get a farming loan?

It depends on your situation, the lender, and the loan product you’re looking to obtain. Lenders will consider your financial situation, but farming experience can be just as important to an application. With a strong background in farming and solid financials, you should be able to get a loan. However, you may be able to still get loans with bad credit, you may just have to accept a higher interest rate or less favorable terms.

What is the best loan for farm equipment manufacturers and dealers?

If you want to make specific equipment or real estate purchases, agricultural equipment financing or commercial real estate loans may make the most sense. If you have more general funding needs, term loans or SBA loans may be your best bet. If you have seasonal or more flexible funding needs, you might consider a business line of credit or working capital loan.

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