Illinois is a leading producer of soybeans, corn, and swine. Here in Central Illinois, livestock farms dot the landscape. Of course, running an agriculture business can be expensive and overwhelming. Ag loans are an important source of funding to grow and expand your farm. To find the best ag financing solution for you, learn about your options and the different ways they can be used. In this article, our goal is to provide you with everything you need to know to start funding the expansion of your farm.


What can ag loans be used for?

Understanding the potential uses of ag financing can help you get started with planning out your farm's expansion.

Do you know all the potential uses of ag financing? Check out the list below to find what you’re looking for to expand your farm.


Equipment Purchases

Every farm needs working equipment to run smoothly. From trailers to water tanks, manure spreaders, feeder mixers, and more, specialized equipment is expensive. For many livestock farmers, the only affordable way to purchase new equipment is by financing the expense with an ag loan.


When cash flow is tight, an ag loan or line of credit can help you keep your farm stocked with the supplies you need such as heaters, livestock feed, etc.

Land Expansion

The good news is that your livestock farm is growing. If you need more land to expand your farm, an ag real estate loan can help.

Loan Refinancing

Looking for a lower interest rate or longer term on your existing ag loan? Ag loan refinancing can help you save money, reduce your monthly payment, or change loan terms.

Operating Costs

Having trouble paying your employees or utility bills? Use an ag loan or line of credit to finance operating expenses when cash flow is tight.


Types of Financing

There are different types of loans available for different purposes. Flanagan State Bank can help match up your needs with the appropriate type of financing.

At Flanagan State Bank, we are committed to local farmers and agriculture in Central Illinois. We emphasize cash flow analysis in making loan decisions and helping you expand your ag business. We participate in Farm Service Agency (FSA)-guaranteed loan programs and Illinois Finance Authority programs for Illinois farmers.


  • Operating Loans: Low-rate loans to cover a number of agricultural needs.
  • Equipment Loans: Get new or upgraded equipment to keep your operation running smoothly.
  • Ag Real Estate Loans: Financing to lease or purchase property, including acquisitions, expansions, and upgrades.


How to apply for ag loans and lines of credit

There are many factors that go into preparing for the ag loan process. It is also recommended to ask your lender the right questions to get the necessary information you need.

Preparation is one of the most important parts of the ag loan application process. You want to go in with a clear budget and an understanding of your cash needs. Collect the necessary documents in advance:


  • Personal resume describing your career background, education, and experience working on other farms
  • Personal income tax returns from the last three years
  • Balance sheet listing your assets and liabilities
  • Income statement with profit and loss developed on an accrual basis
  • Cash flow budget with your monthly income stream and expenses
  • Titles for real estate and other property used to secure the loan
  • Insurance policies
  • Marketing plan


In addition to being prepared with documentation, just down a list of questions you want to ask your lenders about ag loans and/or the loan process. For example:


  • Is there an appraisal fee for any real estate used as collateral on the loan?
  • Is there an application or commitment fee?
  • Are closing costs, inspection fees, and other loan-related charges paid by the borrower or the lender? Can they be rolled into the loan? When are they due?


Questions the lender may ask you

The question-and-answer process between you and your lender is partly about developing a good working relationship that will serve you for years to come. Here’s what your lender may ask you:


  • Are you a co-signer, endorser, or guarantor for others’ debts?
  • Do you owe income tax on assets already sold or income received?
  • Can you explain your involvement in lawsuits? (If applicable)
  • What is your marketing strategy for your ag product(s)?
  • Are you in compliance with Illinois and federal laws regarding labor and environmental issues?


How to use ag funding to expand or diversify your farm

There are many ways to use your funding to upgrade your farm, so prioritizing your needs and considering outside factors can help steer you in the right direction.

Farming has always been a challenging industry to make a living in. Whether dealing with unpredictable weather or fluctuating prices, diversifying with livestock can help you stay in business. For example, you could add beef cattle to your operation. There are at least 4 different kinds of cattle alone: cow-calf, seed stock, backgrounding-stocker, and feedlot. Other livestock options include pigs, sheep, chickens, and more. If you already have a livestock-only farm, consider growing a cash crop alongside your animals. Consider the differences between organic vs conventional farming. Of course, there are costs associated with diversifying, which is where ag loans come in. Finance the purchase of new equipment, structures, supplies, alternative crops, and more.


Advantages of working with a local ag lender in Central Illinois

Location plays a big part in the agriculture industry, so finding a local lender that is familiar with the area and the needs of local farmers makes a significant difference.

A big part of your search for the right ag loan is finding the right ag loan lender. Since ag is still a very local industry, local lenders will be more familiar with Central Illinois’ agricultural needs.   For example, our ag lending team at Flanagan State Bank knows that agriculture is a major component of Illinois’ economy. We believe that lending operational and long-term capital at an affordable rate to farmers is an important part of our dedication to keeping the agriculture backbone of Illinois strong.


Also, we participate in all the programs that the Illinois Finance Authority (IFA) has developed for the benefit of Illinois farmers. Farm Service Agency (FSA) guaranteed operating loan programs are used in Central Illinois counties to offer a reduced rate of interest for beginning farmers and customers with tighter cash flows. These loans are guaranteed by the federal government and, therefore, do not require a family guarantor or co-signer.


Contact our ag team today!

Here in Central Illinois, farming is a way of life. That’s why Flanagan State Bank is committed to serving our agricultural community. We also know that as your operation grows, your needs change. Committed to agriculture and our local farmers, we go the extra mile to help you continue to run a profitable operation. So whether it’s acquisitions, expansions, or an upgrade, we have the right loan available to meet your needs. To learn more or start the application process, contact a member of our Agricultural Lending Team or visit one of our nearby locations to learn more.