Loan for Business

Dairy farm loans in India: Eligibility, benefits & online application

By Tata Capital
27 February 2026
10 mins read
2447

Dairy farming has been a popular source of income in rural India. It strongly supports many families, communities, and economies. In fact, it is one of the leading contributors to the agricultural sector, promoting economic growth and providing livelihood for millions of farmers. However, if you want to step into dairy farming, you need a significant investment. Fortunately, most financial institutions in India offer dairy farm loans to help you start or expand dairy farm operations.

This article helps you understand the important details of a dairy loan, its interest rates and charges, and the application process.

What is a dairy farm loan?

A dairy farm loan is an agricultural loan offered by banks or NBFCs to people who run or want to run a dairy farm. It provides money to help you buy cows or buffalo, build sheds, and purchase feed. You can also use the funds to install milking machines and manage daily expenses. The purpose of the loan is to help farmers increase milk production and earn a steady income. It aims to support rural livelihoods and strengthen the dairy supply chain.

Farmers and agribusiness owners can use dairy farm loans to expand herds, improve equipment, set up cold storage, or handle working capital needs. The repayment is usually done in monthly or seasonal installments from milk sales.

Key features and benefits of dairy farm loans

Here’s a quick overview of the essential features and benefits of dairy farm loans:

Easy access to funds for buying cattle, feed, and equipment
Repayment terms are flexible based on milk income
Low interest rates, with some schemes having government support
Helps expand herd size and increase milk production
Supports the construction of sheds, storage, and milking units
Improves cash flow for daily expenses
Encourages modern technology and better animal care
Builds stable income and business growth
Strengthens supply chain and local dairy markets
Creates job opportunities for farming families

High loan amount for farm expansion

With a dairy farm loan, you can get a high loan amount based on the farm size, assets, and repayment ability. Larger funding helps farmers buy more cattle, build larger sheds, install modern milking machines, and improve storage. Higher limits also allow farmers to expand production, serve more buyers, and grow income. This support makes it easier to scale dairy operations and run a profitable farm.

Flexible loan options

Dairy farm loans are flexible, allowing farmers to choose a plan based on their income cycle. Some loans work like flexi loans or overdrafts. Farmers can withdraw money as needed and pay interest only on the amount used. You can adjust the repayment terms according to milk sales.

Flexible loan options make it easier for you to handle emergencies. You can also manage cash flow better. As your financial burden reduces, you can focus on running and expanding your dairy farm business.

Faster approval process

Many lenders now provide faster approval for dairy farm loans. With the dairy loan apply online option, farmers can complete the application from home. The loan can also be tracked without visiting the branch. Basic checks and e-KYC speed up verification. Some loans get approved in a few days instead of weeks. Such quick processing helps farmers make timely purchases of cattle, feed, or equipment. It ensures there are no delays in farm operations.

Collateral-free loan options

Some dairy farm loans are available without collateral, especially under government or small-business schemes. These unsecured loans are given based on credit history, farm income, and a clear business plan. The loan amounts may be smaller, with the interest rate slightly higher. Farmers must meet eligibility rules to qualify. Installments must also be paid on time to avoid penalties. Collateral-free options help new or small farmers easily start and grow dairy operations.

Convenient repayment tenure

Dairy farm loans offer convenient repayment tenures to match farm income. Farmers can choose monthly or quarterly EMIs based on milk sales. The tenure may range from 1 to 7 years, depending on the loan size. Flexible schedules make repayments easier during low-income periods, helping farmers manage cash flow while running and gradually expanding their dairy business.

Eligibility criteria for dairy farm loans

The eligibility conditions for a dairy farm loan are simple and open to many farmers and agribusiness owners. Lenders check whether the applicant can run a dairy unit and repay the loan on time. Both new and existing dairy farms can apply if they meet basic requirements.

You qualify for a dairy loan if you fulfill the following criteria:

You are an individual farmer, a self-employed person, or a dairy business.
Your age is 18 years or above.
You have a valid ID and address proof.
You have an active bank account.
You have basic farm experience or a robust dairy business plan.
You can submit land, shed, or lease proof (if available).
You can provide the required income or milk supply records.
You have a good credit history and repayment capacity.

Also Read – 20 Profitable Agricultural Business

Minimum business experience

Many lenders prefer applicants with some dairy or farming experience before giving a loan. Usually, 6 months to 2 years of business activity is sufficient. However, it depends on the specific lender’s conditions. Farming experience shows that you understand animal care, milk production, and daily operations. You may need to provide proof such as milk sale records, bank statements, supplier bills, or cooperative membership.

If you’re a new farmer, you can apply with a clear business plan. You may need to prove that you have basic training in dairy farming and management.

Age criteria for applicants

Dairy farm loan applicants must meet the basic age rules set by lenders. The minimum age is usually 18 or 21 years. You must be an adult, permitted to sign legal loan documents. The maximum age at loan maturity is often 60 to 65 years. Lenders set such an age limit to ensure that the borrower is fit to manage the farm and repay the loan on time.

Younger and middle-aged farmers have better chances of approval. Older applicants may still qualify if they apply with a co-applicant or family member involved in the dairy business.

CIBIL score requirement

Lenders check an applicant’s CIBIL score to verify how they have repaid past loans. For a dairy farm loan, a score of about 650 or above is usually preferred. A higher score improves approval chances and may help you get lower interest rates or better terms. If the score is low, the loan may still be possible, but with stricter conditions, a guarantor, or a higher interest rate.

It is possible to improve your credit score. You must remember to pay EMIs on time and clear all dues. You must also check your credit report periodically and get any errors you spot rectified immediately.

Also Read – Seasonal Business Ideas in India for 2026

Resident status and citizenship

To apply for a dairy farm loan, you must be an Indian citizen and resident. Most banks and finance companies require proof that you live and work in India. The common documents include an Aadhaar card, voter ID, passport, or ration card for identity and address proof. The dairy farm should also operate within India.

Non-resident Indians may face limits or need special conditions. If you have clear proof of residency and citizenship, it helps lenders verify your identity and process the loan smoothly and quickly.

Documents required for a dairy farm loan

The documents you require to proceed with the dairy farm loan online application are:

KYC documents, including Aadhaar card, PAN card, voter ID, or passport for identity and address proof
Photographs, in passport size, of the applicant
Bank statements from the last 6 to 12 months to show cash flow and transactions
Income proof, such as milk sale receipts, invoices, or income records
Business proof, including dairy farm registration, cooperative membership, or license (if available)
Land or shed proof, such as ownership papers or a lease agreement
Cattle details, including bills or records of livestock purchase
Loan application form, filled and signed with basic farm details
Business plan, showing expenses, income, and growth plans

Key advantages of taking a dairy farm loan

There are various advantages of taking a dairy farm loan. These include:

Supports business growth: A dairy farm loan helps farmers buy more cattle, improve sheds, and install modern milking machines. This increases milk production and income over time.
Working capital support: The loan provides funds for daily needs, such as feed, medicines, and labor. This keeps the farm running smoothly without cash shortages.
Easy expansion: Farmers can scale operations, reach new markets, and supply more milk to dairies or cooperatives.
Tax benefits: In some cases, interest paid on business loans can be claimed as an expense, reducing the overall tax burden and improving savings for the farm.

Interest rates and charges for dairy farm loans

Interest rates on dairy farm loans vary by bank, lender, and government schemes. They range from about 8% to 15% per year, depending on credit score, loan amount, and repayment history. Some government-supported loans offer lower subsidized rates for farmers.

Lenders may also charge a processing fee, often around 0.5% to 2% of the loan amount. Other possible charges include documentation fees, late payment penalties, and pre-payment or foreclosure fees if the loan is closed early. You must compare offers, read terms carefully, and understand all costs before applying for a dairy loan.

How to apply for a dairy farm loan online?

The step-by-step process to apply for a dairy farm loan online is as follows:

Visit the bank’s or lender’s website. You can also download the mobile app.
Fill out the online application form with personal and farm details.
Upload KYC, income, and farm-related documents.
Submit the form and wait for verification and credit checks.
The lender reviews the application and may call for more details.
Once approved, accept the loan offer and e-sign the agreement.
The funds are credited to your bank account.

The offline application process requires you to visit a nearby branch. You need to submit forms and documents in person and complete verification with the loan officer for processing and approval.

Step-by-step online application process

If you want to apply for a dairy loan online, here’s what you need to do:

Fill the online application: Visit the lender’s website or app. Choose the dairy farm loan option. Complete the form with personal details, farm information, and income. Enter the required loan amount. Check all entries carefully before submitting to avoid delays in processing.
Upload the required documents for verification: Upload KYC documents, bank statements, and farm or income proof. The lender reviews your details, checks your credit score, and may contact you for confirmation or e-KYC verification before giving approval.
Await approval and disbursal: You will be sent a loan offer after the lender approves your application. Review the offer, accept the terms, and sign digitally. After the final checks are completed, the loan amount is transferred directly to your bank account.

FAQs

Can new farmers apply for a dairy farm loan?

Yes, new farmers can apply for a dairy farm loan. Lenders may ask for a simple business plan, training proof, or a guarantor. Government schemes and small-ticket loans often support beginners starting or planning to start dairy operations.

Is a poultry and fisheries loan covered under dairy loans?

No, poultry and fisheries loans are usually separate from dairy farm loans. However, many banks offer combined agriculture or livestock loans that cover dairy, poultry, and fisheries under one broader farming or agribusiness financing scheme.

What is the maximum tenure for a dairy farm loan?

The maximum tenure for a dairy farm loan usually ranges from 1 to 7 years. Some large or government-backed loans may go up to 10 years. The tenure depends on loan size, assets purchased, and repayment ability.

Can I prepay or foreclose my dairy farm loan?

Yes, many lenders allow pre-payment or foreclosure of a dairy farm loan. Some may charge a small fee for early closure. Paying the loan early reduces interest costs and helps clear debt faster.

Which loan is best for dairy farming?

The best loan for dairy farming depends on needs and eligibility. Government-backed agriculture loans, Kisan Credit Card loans, and bank dairy farm schemes are popular. Make sure you compare interest rates, tenure, subsidy options, and flexibility before choosing.

How much loan can I get for a dairy farm from SBI?

The State Bank of India offers dairy farm loans based on project cost and repayment ability. Loan amounts can range from small amounts for a few cattle to several lakhs for larger farms. The exact limits depend on the proposal.

What is the MSME loan for dairy farms?

An MSME loan for dairy farms is given to small dairy businesses registered as micro or small enterprises. It helps with working capital, equipment, and expansion. These loans may offer easier approval, subsidies, and flexible repayment terms.

Previous Post Disclaimer Next Post

Menu

Dairy farm loans in India: Eligibility, benefits & online application

What is a dairy farm loan?

Key features and benefits of dairy farm loans