How to Get a Secured Loan on Crops

Secured crop loans are available in a number of nations, and allow farmers to acquire the funds needed to cultivate crops that are later sold as a means of generating profits and settling the remaining loan balances. In many countries, governmental programs provide the framework for this type of crop financing although there are some private lenders who will underwrite loans on crops that use the harvest as collateral. Applying and receiving this type of loan involves understanding the qualifications, providing documentation that convinces the lender that the deal is worth the risk and following the instructions provided to prepare and submit the loan application.


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    Investigate the range of lenders who provide secured loans on crops. Start with government agencies to identify any possibilities of obtaining government loans, since these often provide lending at very competitive rates. Also look to the private sector, especially organizations that are focused on offering support services to farmers of all types.
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    Compile a list of viable lenders. Base your initial qualification of those lenders on information that is available online and through other media outlets. This will help to limit your list to lenders who have a history of approving secured crop loans in the amount you have in mind.
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    Get the background on each of those lenders. As the next phase of the task, delve into more specific information about each lender on your list. Look into the financial stability of the lender, as well as locating and reading consumer reports about how each lender interacts with its customers. This will give you some idea of which lenders have a reputation for honesty and integrity. Remove those who do not seem to be up to your personal standards.
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    Approach the remaining lenders. Establish contact and obtain specific information on the qualifications that you must meet in order to submit an application and successfully receive a secured loan on crops. Keep in mind that while some lenders will accept just about any type of crop that has market value, others may be focused on approving loans secured with specific crops.
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    Narrow your attention to the lender who seems to be the best fit for your situation. After evaluating the reputation and financial stability of each lender, along with policies and procedures used to consider applications, determine which lender is the most likely to provide the secured crop loan you need.
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    Prepare your support documentation. Many lenders will want to see histories of the past performance of the crops you plan on using as collateral for the loan, as well as the usual information on your assets, current liabilities, and other relevant financial information. In some cases, this may require up to 5 years of data. Include information such as sale prices and total sales volume related to the growing season from 1 year to the next. Make sure to include data about any extenuating circumstances that may have negatively impacted crop production in any one of those years.
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    Submit the application and supporting documents. Use the channels provided by your lender of choice, noting any information about the duration of the application processing.


  • Keep in mind that if the terms that the lender ultimately offers are not what you had in mind, there is always the option of trying the next lender on your list.
  • Review times will vary from 1 lender to another. Make sure you know the average review time for that particular lender, so you have reasonable expectations as to when an answer will be forthcoming.
  • When evaluating the final loan offer, pay close attention to terms and conditions such as any hidden fees and any penalties that may be incurred for earlier payoff. Along with locking in the best possible interest rate, negotiating some of these ancillary costs and fees could save a great deal of money.

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Categories: Mortgages and Loans