As the name suggests this loan is entirely for agricultural purposes. The loans availed by farmers for various farming activities are termed as agricultural loans. Agriculture involves different cycles of operation and a farmer at any time may meet with loses or go bankrupt. Since it is very difficult to maintain the cost associated with agriculture, the farmers will require a low interest agricultural loan to stay afloat.
Recommended Read : Misuse of Agriculture Loans
How Agricultural loans can be used?
Agricultural loans are available for various farming activities like cultivation of crops, horticulture, animal husbandry, etc. There are also special loans that help in buying machineries such as tractors, trucks, etc and for the construction of irrigation systems, biogas plants as well as for purchasing agricultural lands.
Types of Agricultural Loans
Short-term loans: Loans used for operating expenses like for aiding the production cycle, purchase of seeds and saplings, promotion of products, etc. It may last 4-18 months.
Intermediate-term loans: Loans used to finance depreciated assets like machinery, damage to livestock or equipments, to make payment to employees, etc. It lasts for 18 months to up to 10 years.
Long-term loans: Used for developing or buying agricultural lands and it may last for more than 10 years.
Many nationalized banks and Co-operative agricultural banks in India have a variety of schemes to support the farmers. SBI is good at providing agricultural loans as they have around 30 regional rural centers and many schemes.
