Get growing with produce & agriculture factoring
Farming and agriculture have always been, and continue to be, challenging businesses. The labor is hard, harvests are seasonal, and equipment is large and expensive. Moreover, production of a bountiful crop relies heavily on external circumstances. From droughts in California to flooding in Texas, the growth of a profitable crop can be helped or hindered by the unexpected.
Unexpectedness, however, is just one reason why traditional banks are reluctant to lend to those in the farming and agricultural sector. Thin profit margins, complicated supply chains, and large expenses are other reasons. So if you need capital to support your agribusiness, who can you turn to when the banks say no? This is why factoring companies that support this market are so important.
Why choose farm financing?
Agriculture factoring is a long established farm financing method that has been used for decades. Farmers, food processors, distributors, food manufacturing companies, food packaging companies, shippers, and suppliers can all take advantage of agriculture financing.
Agriculture financing can provide capital for your business in a few days. It does this by purchasing your current invoices and paying you for them practically on the spot. This way, you don’t have to wait weeks or months to collect payment from your customers. Farm factoring companies charge a fee for expediting this payment process which can range from 3-8%; each account is different. (The more current the invoice, the lower the fee.)
What’s more, agriculture factoring does not rely on your credit score but on the creditworthiness of your invoices. What does that mean? That means if you supply Walmart its produce and perishables, the farm factoring company only assesses the credit of Walmart, your customer. That’s a relief to many in farming and food production.
Farm factoring is the sustainable choice for startups
If you are seeking small farm funding resources, farm financing is a viable option because it requires no minimum amount. So if you are a startup farmer, distributor, or shipper with clients in good standing, there’s a good chance you qualify for Agriculture financing.
Capital from agriculture farming can be used for any number of things, including:
- Leasing or purchasing farm equipment such as tractors, combines, plows, drills, sprayers, tillers, and other machinery.
- Licensing and regulatory fees and permits.
- Payroll for laborers and other employees.
- Other expenses, such as fertilizers, seeds, fuel, feed, and more.
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