Farming is a complex enterprise—and an expensive one, too. In fact, according to the USDA, the average farm expenditures in Illinois are over $300,000 per year, with profit margins for small family farms usually coming in under 25%. Financing can help bridge the gaps and allow farmers to take advantage of opportunities—but interest rates can eat into these slim profit margins, making affordable, specialized financing key to ongoing financial success.

From purchasing land to managing cash flow, the right financing can give your farm the resources it needs to grow, navigate seasonal income fluctuations, and make necessary improvements. Fortunately, there are many affordable financing opportunities available to farmers in Illinois, and Flanagan State Bank is proud to work with local and national agencies to provide our farming communities access to them, in addition to our own private ag loans. 

In this post, we’ll detail some farm financing options available to our customers, from FSA Guaranteed Loans to discounted Ag Invest Lines of Credit through the Illinois State Treasurer. Whether you’re a conventional farmer or organic farmer, there are many resources available to you. Keep reading to learn more about the diverse funding available!

 

Farm Operating Loans

Farming is a business heavily reliant upon the seasons. Unfortunately, this can make it challenging to ensure you have adequate cash to cover expenses year-round. From purchasing seed and inputs to covering wages between harvests, farm operating loans can provide the cash you need when you need it to keep your operations running smoothly.  

 

Operating loans are ideal for covering the costs of operating expenses and breaking them down into more manageable monthly payments between major income periods. Common expenses include:  

  • Labor 
  • Insurance premiums 
  • Fertilizer 
  • Pesticides 
  • Seed 
  • Livestock 
  • Equipment purchase, maintenance, and repair 
  • Fuel 
  • Utilities 
  • Other overhead costs

Backed by the Farm Service Agency, our Agricultural Operating Loans offer a lower interest rate, as well as affordable payment plans customized to your operation and cash flow. With quick, local decisions, they can keep your farm business running smoothly whenever you need operational funding. 

 

Farm Equipment Loans

While new equipment can significantly increase productivity and provide other operational improvements, it doesn’t come cheap, with costs increasing by 7% over the past year, according to the USDA. Fortunately, as we mentioned above, farmers can utilize FSA operating loans to purchase equipment, too. FSA-backed Equipment Loans through Flanagan State Bank can provide essential financial relief for Illinois farmers, allowing them to buy new implements or replace their undersized or outdated equipment—without straining their finances. 

Benefits of financing new equipment with an equipment loan include:

  • Increased productivity and capacity: Cover more land in less time with newer, larger, and more efficient equipment. 
  • Better fuel efficiency: With advanced technology that increases fuel economy and productivity, you can save significantly on fuel costs with new equipment. 
  • Better safety features: New equipment has improved safety features from sunshades to automatic-shutoff, making it safer for farmers and employees to operate, and potential saving on insurance costs.  
  • Precision farming: Take advantage of the latest innovations like GPS-guided systems to increase yields and land-use efficiency. 
  • Reduced downtime: Experience fewer breakdowns and lost time due to repairs, especially during critical periods, such as planting or harvest. 
  • Preserve cash flow: Financing allows farmers to spread the cost over time, preserving cash flow and reserves for other operational needs. 
  • Tax benefits: Take advantage of tax deductions, such as IRS Section 179, which allows you to deduct equipment depreciation.  

 

At Flanagan, our flexible payment options and customizable payment schedules for farm equipment loans can match payments with your cash flow, creating an affordable option for buying equipment. Additionally, interest rates can be reduced by up to 4% for qualifying borrowers, making it easier for farmers to invest in the machinery needed to keep their operations running smoothly. 

 

Illinois State Treasurer Ag Invest Loans and Lines of Credit 

For 41 years, the Illinois Treasurer’s Office, through its Ag Invest Program, has partnered with approved financial institutions like Flanagan State Bank to offer below-market rate loans to farmers. These loans can fund farm equipment, land purchases, construction, operational expenses, and other farming-related expenses, supporting both conventional and sustainable farming operations. 

Ag Invest offers two loan options:  

  • Long-Term Loans: Used to help pay for major expenses like machinery, purchase of land up to $600,000, building construction, milling, processing, transportation cost, fees, salaries, irrigation systems, and other qualified expenses. 
  • Operating Lines of Credit: Used to help pay for the annual start-up costs, including seed, fertilizer, plants, salaries, transportation costs, transitioning, milling, processing, crop insurance, and other qualified expenses. 

 

To take advantage of this program, our lenders will work with the Treasurer’s office to lower your interest rate to meet the currently approved interest rates.

 

Ag Real Estate Loans for Land Purchase, Improvement, or Refinancing

Starting or expanding a farm in Illinois is an increasingly expensive endeavor, and most farmers who wish to purchase their own land will need to leverage some kind of financing in order to achieve their goals. Farmland prices in Illinois have risen steadily over the past few years, with the average price per acre rising by 5% between 2023 and 2024, and every year you delay purchasing land, these prices will continue to rise. Ag real estate loans can provide the necessary capital to allow farmers to grow their operations without unnecessary financial strain—with added tax benefits.  

At Flanagan State Bank, we offer two farm real estate financing options: FSA Loans, backed by the USDA, as well as private loans with quick closings. 

Like other loans from the FSA, FSA Farm Ownership Loans are available through an approved local lender, like Flanagan, and guaranteed by the Farm Service Agency. As the USDA website explains, these loans can be used to “purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, or to refinance debt.” 

FSA Loans can offer more flexible terms and qualifying requirements as well as lower interest rates, as rates are capped by the USDA—though there may be additional underwriting and servicing fees. These loans of up to $2,236,000 (at time of publication) cannot exceed 40 years and are only available to the owner-operators or tenant operators of family farms. 

Private ag real estate loans from Flanagan State Bank also offer competitive rates, flexible terms, as well as fast, local decisions. Like FSA loans, these loans can be used for acquisitions, expansions, and property upgrades, as well as real estate refinancing. Our in-house processing for private loans can help ensure a streamlined and efficient loan process, tailored to the unique needs of Central Illinois farmers. 

Not sure which loan makes the most sense for your budget or your needs? Reach out to one of our ag lenders to learn more about our Local Ag Real Estate Loans.

Work with Flanagan State Bank for Your Ag Lending Needs

At Flanagan, we work hard to help Illinois farmers to find the right financing to get their farm business off the ground, expand and improve their enterprise, and effectively manage their cash flow. We offer a variety of farm financing options and work with federal and state agencies to provide our customers with access to affordable loans with the best terms and conditions. When you partner with us, you can trust that we will go the extra mile to find a loan to serve you and your farm’s unique needs. 

 

From Operating and Equipment Loans to Farm Real Estate Mortgages, we have an option for every purpose and budget. Speak to a member of our local Ag Lending Team in Flanagan, El Paso, Benson, Bloomington, Le Roy, Gridley, or Pontiac today to explore your choices, learn more about our loans, or get started on your application!