A tractor that breaks down before planting can’t always wait until harvest to be replaced. Farm equipment financing lets you buy the machinery you need and pay for it over time, while keeping cash available for the season ahead. Farm equipment loans, dealer plans, leases, Farm Credit and USDA programs offer several ways to pay.
The right choice depends on what you’re buying, how long you’ll use it and when your farm gets paid. Here’s how the main programs compare, where USDA and SBA financing can fit, and what the numbers look like on a $100,000 purchase.
Why farms use equipment financing
If your tractor is spending more time in the shop, another repair bill may only buy a little time. A planter that’s too small for your acreage can leave you racing the weather. And without enough cooling or storage capacity, you may have to sell sooner than you’d like. Financing gives you a way to address those problems without paying the entire equipment bill at once.
Start with the work the machine will do. How many acres will it cover? How many hours will you use it? What are you spending on repairs, hired labor or custom work now? Those numbers help you decide whether a replacement will earn its keep.
For a machine you’ll only use a few days a year, renting or hiring a custom operator may cost less. Iowa State University Extension’s guide to acquiring farm machinery services walks through those choices. For a closer look at loans and leases, see our equipment financing guide.
Farm equipment financing programs compared
Have a machine in mind before you start comparing lenders. A new tractor from a dealer and an older combine from a neighbor can qualify for very different terms. The lender will want the model, age, hours, seller and price.
| Option | When to consider it | What to check |
|---|---|---|
| Equipment loan or equipment finance agreement | Buying machinery the farm expects to keep | Down payment, collateral, personal guarantee, term and early-payoff rules |
| Dealer or manufacturer financing | Purchasing an eligible machine through a dealer | Financed price versus cash price, lost rebates, promotional conditions and final payment |
| Equipment lease | Using machinery with a defined replacement or return plan | Hour limits, wear charges, maintenance, purchase option and return costs |
| Bank, credit union or Farm Credit equipment loan | Comparing an agricultural lender’s terms and farm cash-flow approach | Eligible assets, seasonal schedules, existing liens and required financial records |
| USDA FSA operating loan | Eligible farm equipment and operating needs | Direct versus guaranteed lending, farm eligibility and repayment capacity |
| Equipment refinancing or sale-leaseback | Reviewing an existing equipment obligation or accessing equity | Payoff, appraisal, fees, ownership changes and total new repayment |
Farm equipment loans and dealer financing
With an equipment loan, you generally own the machine while the lender holds a lien on it. An equipment finance agreement works much the same way. Check which assets secure the debt, especially if your operating lender already has a lien on the farm’s equipment.
Ask the dealer for both the cash price and the financed price. A low promotional rate may mean giving up a rebate, and a shorter repayment term can push up the payment. Find out whether the loan includes attachments, delivery, installation and taxes so you know how much cash you’ll need at closing.
Tractor financing for new and used farm machinery
Start with the work the tractor needs to do. A compact tractor for feeding livestock has a different job from a larger machine used for fieldwork. Get a quote that lists the tractor, loader and other attachments separately. Ask which items the lender will finance together and whether delivery is included.
For a new tractor, compare the dealer’s financing plan with an agricultural lender’s offer. For a used machine, gather its hours and service records and budget for repairs it may need before the next season. The used farm equipment checklist below covers what to collect before applying.
Farm equipment leasing
Leasing can make sense if you replace machinery regularly or want to use it for a set number of years. Read the end-of-lease terms closely. You might have a fixed buyout, an option to buy at market value, or a requirement to return the machine. That difference matters when you compare payments.
Hour limits and return charges deserve a close look on farm machinery. Find out who covers repairs, insurance and transport, too. Iowa State’s farm machinery leasing guide has a useful list of questions to take to the lessor.
Farm Credit and local agricultural lenders
An agricultural lender may be more familiar with the gap between paying for inputs and getting paid for a crop. The Farm Credit System’s cooperative lenders offer agricultural equipment financing, and many local banks and credit unions have farm lending teams. You can find a nearby association through the Farm Credit lender locator. Farm Credit and USDA are separate sources of financing.
Refinancing and sale-leasebacks
If you already own equipment, refinancing may let you replace its current loan with different terms. A sale-leaseback works differently: you sell the machine to a financing company, receive cash and lease it back to keep using it. Compare the cash you’d receive after paying off liens and fees, then look at the full repayment and any final buyout. A lower monthly payment can cost more over a longer term.
USDA loans that can help finance farm equipment
USDA’s Farm Service Agency offers both equipment and operating credit. You can apply to FSA for a direct loan or work with a participating lender on an FSA-guaranteed loan.
FSA Direct and Guaranteed Operating Loans
FSA Farm Operating Loans can fund machinery and equipment as well as eligible farm operating expenses. FSA lists a $400,000 maximum for Direct Operating Loans. Equipment repayment terms depend on purpose and ability to repay and can extend up to seven years. Guaranteed limits are adjusted, so confirm the current ceiling with the participating lender.
For a direct loan, FSA reviews your farm plan, finances and ability to repay. It also considers whether you can obtain suitable credit elsewhere. Bring your records to the local FSA office and explain how the equipment fits into the operation.
FSA Operating Microloans
If you’re financing a smaller purchase, the FSA Operating Microloan is worth a look. It offers up to $50,000 for equipment and other eligible operating needs, making it relevant to smaller farms, new operators and specialty growers. Your loan officer can explain how your experience and any existing FSA debt affect the application.
Farm Storage Facility Loans
A grain storage or produce-handling project may fit the Farm Storage Facility Loan program. It covers eligible storage facilities and handling equipment for commodities you produce. For a tractor purchase, look at the operating-loan programs instead.
FSA lists limits of $500,000 for storage facilities and $100,000 for storage and handling trucks, with terms ranging from three to 12 years. Its storage microloan category has different down-payment and documentation provisions. Confirm that your commodity, proposed equipment and project timing qualify before ordering.
Farm Ownership Loans and beginning-farmer assistance
Farm Ownership Loans address purchasing or enlarging farms and eligible real-estate improvements. Separate the land purchase from the movable-equipment budget so each expense is considered under the appropriate program. Beginning farmers can ask FSA about targeted assistance and which loan structure fits their operating history.
SBA loans and other programs available to farms
Where SBA 7(a) and 504 financing may fit
SBA financing is worth discussing with a lender, particularly if your business includes processing or agricultural services. A production farm and a farm-related business can face different eligibility rules, so describe what the business does and exactly how you’d spend the loan. For production needs, compare USDA options as well.
For qualifying businesses, SBA 7(a) loans can cover machinery, equipment installation and working capital. The maximum loan amount is $5 million, subject to eligibility and underwriting. Read our SBA loan overview for the general application process.
SBA 504 financing supports eligible major fixed-asset projects. Machinery must have at least 10 years of remaining useful life. The program cannot fund working capital or inventory. A Certified Development Company and participating lender can determine whether a proposed facility or equipment project fits. Use our SBA loan calculator for an initial payment estimate after confirming the appropriate structure and terms.
USDA Rural Energy for America Program
If you’re planning an energy upgrade, look into USDA’s Rural Energy for America Program, or REAP. It provides grants and loan guarantees for eligible energy systems and efficiency improvements.
The rules recently changed. USDA’s October 2, 2026 REAP announcement describes new requirements, including having projects built, operating and demonstrating performance before applying under the revised rules. Application dates will be announced in annual notices. Your State Energy Coordinator can explain which rules and deadlines apply to your project.
NRCS conservation assistance and state programs
The Environmental Quality Incentives Program, or EQIP, offers financial and technical assistance for approved conservation practices. Payments depend on the approved practice and contract. Do not assume it will reimburse a general equipment purchase. Discuss the practice, schedule and approval requirements with NRCS before starting work.
Your state agriculture department or local Extension office may know of additional beginning-farmer loans and cost-share programs. For seasonal expenses, you can also compare an agricultural operating line with a business line of credit from a provider that finances farms.
Farm equipment financing rates and a payment example
Farm equipment financing rates vary with your credit, the farm’s finances, the machine, the down payment and the repayment term. To make the comparison useful, give each lender the same purchase price, loan amount and preferred schedule.
FSA’s published interest-rate table lists 5.375% for Direct Operating Loans and Operating Microloans, effective October 1, 2026. Check the table for the latest rate when you’re ready to apply.
Put the fees and total repayment beside the interest rate when you compare quotes. Also ask what you’d owe if you paid the loan off early. If an offer uses a factor rate, our APR and factor-rate guide explains how to compare the cost.
Illustration: financing a $100,000 equipment purchase
Say you’re buying a $100,000 tractor and putting $20,000 down. Here’s what an $80,000 loan would cost over five years at a fixed 8% annual interest rate, with monthly payments. This example leaves out fees, taxes and insurance and assumes no balloon payment.
| Equipment price | $100,000 |
|---|---|
| Down payment | $20,000 |
| Amount financed | $80,000 |
| Monthly payment | About $1,622 |
| Total interest over 60 months | About $17,327 |
| Total down payment plus loan payments | About $117,327 |
Use the equipment financing calculator to estimate monthly payments with your own purchase price and down payment. Add fuel, maintenance, insurance and repairs to your budget, too. If you need annual or seasonal payments, ask the lender to work out that schedule.
Seasonal payments for farm equipment loans
If most of your income arrives after harvest, monthly equipment payments can be awkward. Some agricultural lenders offer annual, semiannual or other seasonal schedules. Ask whether the due dates can follow your expected receipts, how interest builds between payments and when the first payment comes due.
Map out the year month by month, including inputs, repairs, existing debt and household withdrawals. Then try the budget with a lower crop price or a delayed buyer payment. You’ll see how much breathing room you have before signing for another machine.
Iowa State Extension’s cash-flow budgeting guidance explains how to account for the down payment and ongoing loan payments. Our guide to positive cash flow can help you think through the rest of the budget.
An operating line and an equipment loan do different jobs. The line can cover inputs as you need them; the equipment loan spreads a specific purchase over several years. Our revolving versus installment credit guide explains the difference. The line-of-credit calculator can help you budget interest on seasonal borrowing.
Used farm equipment financing and credit requirements
A used tractor or combine can cost less upfront, but the price tag only tells part of the story. Lenders may limit the age or hours they’ll accept. Before buying privately or bidding at auction, check what the lender needs and how quickly the seller expects payment.
Used tractor financing: hours, repairs and seller records
- Gather the machine’s details: make, model, year, serial number, hours, attachments and purchase price.
- Check the condition: have a mechanic inspect the machine and price any repairs it needs before the next season.
- Check ownership and liens: confirm who owns the machine and how any existing equipment loan will be paid off.
- Confirm useful life: consider whether the machine can reliably work through the repayment period.
- Budget delivery and setup: include transport, installation, compatibility and operator training where relevant.
Can you get farm equipment financing with bad credit?
A lower credit score can mean fewer lenders to choose from or a larger down payment. Your farm’s cash flow, existing debt, experience and the machine’s value also matter. Be ready to explain past credit problems and show how the payments fit your farm’s budget.
Buying equipment when you’re new to farming
For a new farm, show how you worked out your production and sales estimates. Include your farming experience, the work the machine will do and the cash you’ll have left after the down payment. Ask your local FSA office whether beginning-farmer assistance or an operating microloan fits your plans.
How to apply for farm equipment financing
- Get a written quote. Ask the seller to list the machine, attachments, price and delivery date.
- Gather your financial records. Have your tax returns, bank statements, current income and expense records, a balance sheet and debt schedule. Review our business loan documentation guide as a starting checklist.
- Explain repayment. Provide a seasonal cash-flow forecast and show how the equipment improves the operation. Include existing loan payments.
- Compare suitable programs. Request commercial and agricultural offers, and contact FSA where relevant. Have an SBA lender assess eligibility before spending time on an SBA application.
- Compare complete written terms. Review cash due, payment dates, fees, collateral, guarantees, balloon or buyout amounts, and early-payoff provisions.
- Coordinate closing. Confirm insurance, seller payment, lien releases and delivery. An initial approval does not mean the seller has been paid.
Farm equipment financing FAQs
What equipment can a farm finance?
Depending on the lender and program, you may be able to finance tractors, combines, planters, balers, loaders and irrigation equipment. Give the lender the details of the machine you want to buy. Grain storage and produce-handling projects may fit programs designed for those purchases.
How long can you finance a tractor or other farm equipment?
The lender will consider the type of loan and how much useful life the machine has left. Ask for quotes on the terms available for your tractor. Compare total interest as well as the payment, especially if you expect major repairs before the loan is paid off.
Can you finance equipment bought at auction?
Yes, some lenders finance auction purchases. Talk to the lender before bidding so you know what paperwork it needs and whether it can meet the auction’s payment deadline. Confirm that it will accept the machine you plan to buy.
Can a new farmer get equipment financing?
A new farmer may qualify through a commercial lender or a USDA program. Expect to discuss your farming experience, farm plan, repayment budget and down payment. Ask what records the lender accepts when you don’t yet have several years of farm income.
Are USDA farm equipment loans grants?
No. FSA equipment loans must be repaid. REAP grants and NRCS assistance cover specific energy or conservation projects, with their own requirements. Check whether your planned purchase qualifies before including that money in your budget.
Is buying better than leasing?
Compare the same equipment over the same period, including fees, repairs, resale value, buyout costs and return requirements. Ownership may suit long-term use, while a lease may suit a defined replacement cycle. The payment alone does not settle the comparison.
Where can I find farm equipment financing near me?
Start with agricultural banks and credit unions, a Farm Credit association, equipment dealers and your local USDA Service Center. Ask each provider about the machine you want to buy and whether its payment schedule can fit your farm’s income.
Plan the equipment purchase before choosing the loan
Bring your equipment quote, repair budget and expected payment dates to the lender. A useful offer should tell you how much cash you need upfront, when each payment is due and what you’ll pay in total.
Explore Excel Capital’s equipment financing options with your equipment quote and preferred payment schedule in hand. If a USDA program looks like a better fit, your local FSA office can help you get started.