By Krista Williams
Understanding Agricultural Loan Categories
Agricultural lending can be broken down into two distinct categories: real estate loans (farmland loans) and non-real estate loans (agricultural production loans). As of March 31, 2026, farmland loans represented approximately 62% of total agricultural lending at community banks, while agricultural production loans accounted for 38%.
Farmland loans help farmers purchase farmland or construct buildings and facilities through long-term mortgages that typically extend 15 to 30 years, secured by the property being financed.
Agricultural production loans support the operational aspects of farming and include equipment and livestock loans as well as operating lines of credit. Equipment loans fund machinery purchases, such as tractors and combines, while livestock loans finance the purchase of animals for breeding, dairy or meat production. Operating lines of credit provide short-term financing for seasonal expenses—such as seed, fertilizer, pesticides and labor—typically repaid after harvest when crops are sold.
The year-over-year growth in agricultural production loans is consistent with increasing input costs for farmers, who require greater financing to maintain operations. Additionally, carryover debt may contribute to this loan growth. Carryover debt occurs when a farmer’s income in a given year is not sufficient to pay off their operating loan, so the unpaid balance carries over to the next year.
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