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Tata Capital > Blog > Loan for Business > Can You Get A Business Loan To Start An Agriculture Business In India?

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Can You Get A Business Loan To Start An Agriculture Business In India?

Can You Get A Business Loan To Start An Agriculture Business In India?

Getting the tools and equipment you require as a farmer might be challenging, and the expenses can be astronomical and would likely take away from money that would be better used for other priorities. Both individuals who are already operating an agriculture business and those who want to establish one will find it challenging.

If you have an excellent agriculture business idea and are now looking for financing options like a loan for agriculture business, you have come to the right place.

Whether it’s a small-scale backyard business or a startup that requires huge capital investment, funds are crucial to set things in motion. Several options for agri business funding are available to suit different needs.

Well, in India, your ingress into the agri-business world is fairly hassle-free. Yes, thanks to the easy availability of business loan for farmers. Here is a guide to understanding how to get agriculture business finance in India.

Features of agriculture business loans

As an agricultural business owner, you can receive business farm loans not just for crop cultivation but any agriculture-related activities. This includes animal husbandry, garden crop cultivation, floriculture, aquaculture, silk farming, bee-keeping, and securing resources such as fertilizers, machinery, agricultural equipment, etc.

You can apply for loan for agriculture business to run your daily operations, purchase land, expand your business, buy the latest equipment, market your products and services, protect inventory, and more.

Agri business funding can help you pay for the land costs you might incur if you’re planning to purchase more farmland or increase the amount of property you already own. These business loans can be short, medium, or long term.

As per the Reserve Bank of India (RBI) guidelines, you can get a collateral-free loan for up to Rs. 1 lakh. For loan amounts exceeding that, the collateral requirements depend on lenders.

Furthermore, the simplest and least amount of paperwork is required to obtain a business loan for farmers.

Eligibility criteria for agriculture business loans in India

Before applying for an agriculture business loan or seeking agri business funding, it is essential to know the eligibility criteria that lenders and financial institutions follow. These criteria ensure that loans reach genuine farmers, agriculture entrepreneurs, and startups engaged in agriculture.

Key eligibility requirements for loan for agriculture business or loan for agriculture startup include:

  1. Citizenship: Applicant must be an Indian citizen.
  1. Engagement in agriculture: Must be involved in farming or allied activities such as horticulture, dairy, poultry, fisheries, or agro-processing.
  1. Age: Generally between 18 and 65 years; some flexibility depending on the lender.
  1. Experience/Knowledge: Practical knowledge or experience in agriculture or related activities is preferred.
  1. Financial stability: Should have a stable income source and a reasonable credit history.
  1. Land ownership: Submission of land ownership or lease documents may be required.
  1. Identity proof: Government-issued identity and address proof is mandatory.
  1. Bank account: Active bank account for loan disbursement.
  1. Business documents (for enterprises): Registration certificates, financial statements, and project reports may be required for agri business loan or business farm loans.
  1. Collateral (optional): Some government or NABARD schemes offer collateral-free loans for small and marginal farmers seeking a loan for farming business.

How to apply for agriculture loans?

Before applying for a loan for agriculture business, it is crucial for borrowers to have clarity on how much money they need, why they need it and how they are going to pay it back.

The business loan for farmers application process varies for different lenders. Nowadays, you can apply for loans online as well. However, before approaching a lender, it is crucial to research business loan interest rates, benefits, loan tenure, eligibility, features, and terms and conditions. After comparison, the borrower can choose the most suitable lender to them according to their needs.

Besides, borrowers must read the fine print and look for hidden costs beforehand. The standard procedure involves filling a loan application and the KYC form and attaching necessary documents.

Here are the common documents required for business farm loans.

  • Passport size photographs
  • Identity proof such as Aadhar, PAN, Voter ID, ration card, etc.
  • Address proof such as passport, electricity bills, water bills, etc.
  • Income proof, bank statements, ITR filing, etc.
  • KYC documents
  • Quotations from vendors for equipment purchase
  • Land ownership proof if applicable

Also, be aware that your lender may require some additional documents. So, make sure you have all the documents before applying for a loan for farming business. Knowing what documents you will need when applying for a loan can help you make the process much easier and quicker.

Best schemes & collateral-free options for agri startups & farmers

For aspiring farmers, several agriculture business loan schemes and collateral-free options are available in India to promote growth and innovation in the sector. One of the most popular schemes is the Pradhan Mantri Mudra Yojana (PMMY), which provides funding for small-scale agri enterprises and startups without requiring collateral. NABARD also offers refinance and direct lending programs for farmers and agriculture startups, supporting activities like horticulture, dairy, poultry, fisheries, and agro-processing, making loan for agriculture startup more accessible.

The Government of India’s Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) allows business loan for farmers and loan for agriculture startups up to a certain limit without pledging assets.

For those looking for business farm loans, schemes under National Agriculture Development Programme (NADP) and state-specific subsidies offer collateral-free credit to small and marginal farmers. These initiatives make agri business funding accessible, helping farmers expand operations, adopt modern technology, and strengthen rural entrepreneurship.

Many financial institutions and regional lenders provide business loan for farmers under priority sector lending, often with simplified documentation and lower interest rates.

Interest rates, tenure & repayment flexibility for farm business loans

When applying for a farm business loan, understanding interest rates, loan tenure, and repayment flexibility is crucial. Interest rates for agriculture business loans vary depending on the type of loan, lender, and government subsidies, often being lower for priority sector lending and collateral-free schemes. Loan tenure is typically flexible, ranging from short-term loans for seasonal requirements to long-term loans for farm expansion, equipment purchase, or Agri business funding.

Financial institutions offer business loan for farmers with customisable repayment options, allowing borrowers to choose monthly, quarterly, or seasonal repayment schedules aligned with crop cycles and income patterns. Prepayment or part-payment facilities are often available, helping farmers reduce interest costs. This flexibility ensures that a loan for agriculture business or loan for farming business can be managed comfortably, supporting sustainable growth while maintaining financial stability.

How to increase your odds of getting a loan?

Before issuing a loan for agriculture startup, lenders assess the business’s credit score, which certifies the dependability and ability of the business to pay off debts. Lenders are more likely to have faith in a company’s ability to repay loans if it has a good credit score. Several lenders offer competitive interest rates for consumers with a strong CIBIL score.

Therefore, to improve your business farm loans eligibility, you must build a good credit score, preferably between 700 and 900.

Besides, keep your credit history debt-free and pay off any existing liabilities and loans before opting for a new agri business loan. While applying, prepare a written detailed plan on how you plan to use the funds.

To conveniently repay the loan, take into consideration potential profits, account losses, and decreased profits. Use a business loan EMI calculator to calculate your EMIs and interest payable and plan your repayment in advance.

Moreover, always apply for a loan best suited to your business’s financial requirements. If you file multiple loan applications, it can affect your credit score negatively.

From a future perspective also, it is essential that you take out a loan for farming business that is needed and that you are capable of paying. Applying for a loan amount that you might not be able to repay on time otherwise results in a low CIBIL score, which may hinder your ability to borrow money from your lender in the future.

Finance your agriculture business with Tata Capital!

We offer security-free multi-purpose financing with easy business loan eligibility. Our loans are customised to fund varying business needs at competitive interest rates. Enjoy simple documentation requirements, structured EMI plans, and extended loan tenures.

There’s no time better than now to turn your dream into reality, especially when it comes to agriculture. Apply now!

Parting thoughts

Agriculture-related industries have a lot of room for expansion, especially with financial assistance from the government and lenders, as well as technology advancements made by agribusiness. And by 2027, it is anticipated that Indian agriculture will generate INR 142,280 billion. Therefore, if you have been putting off starting your farm business due to lack of funds, stall no more and apply for a loan for agriculture startup.

Many lenders support agriculture businesses by providing quick loan for farming business. Conduct thorough research, display a strong repayment intent, and maintain a good credit history to secure your agriculture loan.

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FAQs

Can I get an agriculture business loan in India without any collateral?

Yes, you can avail a collateral-free agriculture business loan or loan for agriculture startup.

What is the minimum credit score needed for an agri business loan?

The minimum credit score for an agriculture business loan depends on lenders’ policies.

Which government schemes or subsidies are available for agricultural business loans?

Government schemes like PM-Kisan, NABARD refinance, and MSME support provide subsidies for loan for farming business.

What expenses are covered by an agri business loan?

An agri business loan can cover expenses like seeds, fertilizers, equipment, irrigation, livestock, and operational costs.

How quickly can funds be disbursed after agriculture loan approval?

Funds from an agri business loan are typically disbursed within 2-9 weeks.

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