Short term loans for farmers: What are agricultural loans and how do they work?

Agricultural loans enable the farmers to engage in seasonal activities like animal farming, purchase of land or buying of essential equipments. Short term loans are specifically designed to meet the emergency needs of farming operations for crop production, land preparation, storage and transportation with a view to making the operation of the farming operation smooth.

Steps to apply for agricultural loans

Explore loan options:

• Explore different lenders and compare their loan offerings, interest rates, and eligibility criteria.
• Choose a loan that best suits your agricultural needs.

Visit lender’s branch:

• Go to the nearest bank or NBFC offering agriculture loans.
• Carry all required documents to speed up the application process.

Apply online (if available):

• Some lenders even allow online applications on their official websites.
• Fill the application form and visit the lender’s website, clicking on "Apply Now".
• Upload the necessary documents as per the lender’s requirements.

Verification and approval:

• The lender will review your application and verify your documents.
• If you meet the criteria, the loan will be approved.

Loan disbursement:

• Once the loan gets approved, we shall credit the amount to your bank account.

Documents required for agriculture loans

• Completed loan application form
• KYC documents (identity and address proof)
• Land or asset ownership documents
• Security post-dated cheques (PDC)
• Additional documents as per lender’s requirements

Eligibility criteria for agriculture loans

• You must be between 18 and 70 years of age.
• You will be required to own assets and provide them as collateral in order to be eligible for the loan.
• You can apply for the loan both individually or jointly, as per lender terms.

Types of short term agriculture loans

Kisan credit card loans (Crop loans):

• Loans for short term to cover cultivation costs such as seeds, fertilisers and pesticides.
• It is usually paid after the harvest, during one agricultural season.
• If you are eligible, you are provided with subsidised rates of interest by government schemes.
• Simplified application process with minimal documentation.
• Gold loan for agriculture: In this you can pledge gold as security to get a loan for expenditure on crops.

Livestock loans:

• This loan is typically suitable for you if you are a farmer engaged in animal husbandry, poultry, or dairy farming.
• This covers purchase of livestock, construction of sheds, feed costs, etc.
• The amount of loan depends on the number of animals, cost of maintenance and expected income.
• Typically with flexible repayment based on livestock growth cycles.

Warehouse loans:

• Provides credit against stored agricultural produce in recognised warehouses.
• The warehouse receipt is used as collateral.
• This loan helps you to secure funds while waiting for better market prices.
• Typically offered for up to 12 months, with lower interest rates.

Solar pump set loans:

• It supports the purchase of solar powered water pumping systems for irrigation.
• It encourages sustainable farming with renewable energy.
• The repayment tenure may extend up to 10 years with respect to additional income from irrigation.

Farm mechanisation loans:

• Provides financial assistance to purchase machinery such as tractors, tillers and irrigation.
• It helps improve efficiency and productivity through modern equipment.
• Higher investment leading to longer repayment tenure as compared to crop loans.
• There may be a requirement of collateral or co-applicants.

Land purchase loans:

• Designed to help you buy agricultural land for cultivation, horticulture, or allied activities.
• Can be used for purchasing farmland, orchards, or forestry land.
• Long-term loans with repayment tenures of up to 15 years.
• Loan approval depends on land value, location, and potential agricultural income.

Agriculture loan interest rates offered by top banks in 2025

Source: Bankbazaar

In conclusion, short term loans can be a great way to get financial assistance to increase your crop production. However, before you apply for the loan, you must make sure that you plan your repayment and borrow the amount that you can afford and repay easily. This way you can avoid any financial burden and maintain a healthy credit profile for future borrowings.

(Note: Raising a loan comes with its own risks. So, due caution is advised)