Where to Find Poultry Farm Business Loans
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Americans in 2018 consumed 110 pounds of poultry, including chicken and turkey, per capita, according to the U.S. Department of Agriculture. Poultry is the top meat export in the U.S., ahead of pork and beef.
Nearly 43,000 farms in the U.S. raise broiler chickens, which are bred for consumption, though farms across the country also raise birds such as turkeys, ducks, quails and roosters.
If fluctuating income leaves your farm in a lurch, you could apply for a poultry farm business loan to receive financial relief.
Loans for poultry farm businesses
Many independent poultry farms have contracts with larger, federally-inspected companies that process and sell birds. Tyson Foods, for example, pays $800 million annually to more than 4,000 contracted chicken farms.
Even with a contract, poultry farmers’ income can vary. For chicken farmers, the number of chicken houses on a farm and the type of chickens raised – such as birds raised without antibiotics or through certified organic production – could affect how much revenue the business generates. And though turkeys are in high demand around Thanksgiving, farmers often earn just pennies per pound of turkey sold.
You may consider outside financing when the expenses of running a poultry farm exceed what you have in your bank account. Business loans from banks or alternative lenders could help you cover costs from construction to feed.
We’ve compiled a list of some lenders catering to poultry farm and agriculture businesses where you may be able to apply for financing.
Live Oak Bank
Live Oak Bank, which is based in Wilmington, N.C., lends to poultry farm business owners across the country looking to build or renovate poultry houses. Loans are also available to purchase existing farms.
The bank is a preferred lender of financing backed by the U.S. Small Business Administration. SBA loans range from $500 to $5 million and are available through several programs.
The 7(a) program is the SBA’s primary lending program for small business owners. The SBA guarantees 75% to 85% of a 7(a) loan, depending on the amount, and caps how much interest lenders can charge. The maximum fixed interest rate for 7(a) loans is 12.81%. Repayment terms span seven to 25 years for 7(a) loans.
The SBA in 2018 evaluated loans made to poultry farmers between 2012 and 2016 and found that about $1.8 billion in 7(a) financing may be ineligible. Because of the supervision of large companies, which control and regulate much of their contractors’ operations, the SBA decided many independent poultry farmers did not meet its small business size standards.
If your poultry farm is under contract, you could face difficulty qualifying for an SBA loan.
AgAmerica Lending is a Florida-based online business lender focusing on real estate and land financing. It also specializes in poultry farm loans.
Agricultural farm, ranch and timber land loans from AgAmerica Lending start at $50,000 and max out at 75% of the value of the property. A minimum of 25 acres would be required, as well as a minimum credit score of 680. Loan terms could be as long as 30 years.
It also offers a short-term bridge land loan for farmers looking to pay back debt quicker. Loan amounts range from $300,000 to 50% of the value of the land, which could be purposed for agricultural use or residential infrastructure development. Repayment terms span 12 to 36 months. Property in Nevada or California wouldn’t be eligible for short-term financing.
AgAmerica doesn’t disclose interest rates online, so you’ll need to contact the lender directly for more information.
USDA farm loans
The USDA issues loans through its subsidiary, the Farm Service Agency. Loans are designed for farmers who have trouble securing traditional financing. You could use a USDA loan to purchase or renovate an existing farm, to buy equipment or chickens, or as emergency funding. The USDA requires three years of production and financial history, as well as an acceptable credit history that shows you could pay back your debt.
One of the available USDA loans is the Farm Ownership Loan, which is available for up to $600,000 with terms up to 40 years. You would need to make a down payment of 5% of the purchase price. The Farm Operating Loan is also available for up to $400,000, with terms up to seven years. For unexpected expenses, the Emergency Farm Loan could cover 100% of the value of your loss or $500,000, whichever is lowest. Repayment terms go up to 18 months, depending on your repayment ability and type of loss.
As of Oct. 1, 2019, your interest rate would be 2.625% for a Farm Operating Loan, 3.250% for a Farm Ownership Loan and 3.625% for an Emergency Farm Loan.
National Funding is an online lender providing loans to agriculture businesses. Small business loans to finance daily expenses, such as materials and payroll, are available from $5,000 to $500,000. Equipment financing and leasing is offered for up to $150,000.
You could apply for a National Funding loan online and receive funds in as few as 24 hours after approval. Repayment terms span four months to two years for small business loans, and two to five years for equipment financing. APRs could range from 17.00% to 38.00%.
To be eligible for a small business loan, National Funding requires one year in business, $100,000 in annual sales and a credit score of at least 500. Equipment financing requires six months in business and a credit score of at least 620. If you need a smaller amount of funding for your poultry farm, National Funding also offers a merchant cash advance up to $250,000, which would involve the lender taking payments out of your daily credit card sales.
PNC Bank provides financing for agriculture businesses, including secured term loans and owner-occupied commercial real estate loans. Amounts range from $100,000 to $3 million.
Your rate would be based on a review of your credit application, though PNC doesn’t disclose its rates online. To apply, you’d need to contact an agriculture business banker at your local PNC branch. PNC has 2,400 locations across the U.S., primarily in the Southeast, Midwest and Northeast.
Costs of running a poultry farm business
If you’re looking at loans for a poultry farm business because you’re thinking about starting one, you should know that your expenses would vary depending on the type of bird you raise.
For example, chicken farm owners would not only need to find a suitable location for the farm, but they’d have to build structures to house chickens. It could cost $250,000 or more to build a chicken house, and you could need as many as four houses to run a profitable commercial business, which would be a $1 million investment.
Depending on your goals for the business, the minimum number of chicks you would purchase could range between 200 and 500 birds. And you could expect to spend 70% of your project expenses on bird feed.
Turkeys are larger and typically reside in a fenced-in area. You would need to purchase fence material such as poultry netting, woven wire fencing, metal posts or wooden posts. About 75-by-75 feet of space is usually suitable for a dozen birds.
A quail farm requires a small investment, and you may be able to set up a coop for $50 or less. Most quail require just 4 square feet of space. Day-old quail chicks could cost a little as $1 each, and eggs typically sell for $4 to $5, depending on your area.
As a poultry contractor, you could receive assistance when establishing your farm. Perdue, for instance, provides farmers with chicks and veterinary care through its contract agreements. Perdue maintains ownership of the chickens and farmers must build their own facilities, but the company could offer financing or incentives to offset costs.
The bottom line
Because poultry is in high demand in the U.S., starting a poultry farm could be a worthwhile avenue for agriculture businesses. It may be a costly endeavor, but business financing could give you a boost.
Loans for poultry farm businesses could help you purchase farmland, construct poultry houses or buy feed and other supplies. Loans are available from banks and online lenders and come in varying amounts to fit your financing needs.
Before applying for a loan, consider making improvements to your credit score. With your credit in good standing, you could have a better chance of being approved for an agriculture business loan. You may also want to have a business plan prepared that outlines details such as operating costs, maintenance fees and supply expenses, as well as how you expect to turn a profit. Previous experience in the agriculture or poultry industry would be beneficial as well.
Be sure to shop around for the right lender that provides a funding amount, rates and terms that work for your business. Once you receive a loan offer that meets your requirements, you could be on your way to growing your poultry farm business.