Farm loans and grants are crucial sources of funding for agricultural producers. They both play a vital role in supporting the success of farmers, ranchers, and agribusinesses. When you’re looking to access capital and ensure a solid foundation for the growth of your operation, there are key differences between farm loans and grants to consider.

This is the most commonly known differentiator between farm grants and loans. While farm loans require repayment based on specified terms, farm grants are recognized as a free form of financing.

Another important difference between farm grants and farm loans is the institution you’ll be working with to secure financing. Farm grants are available from federal entities, such as the Farm Service Agency (FSA), as well as state, and private organizations.

There is some overlap here, as government entities provide farm loans in addition to grants.

While High Plains Farm Credit doesn’t offer farm grants, our team of experts focuses on providing a wide variety of agriculture loans to members of our customer-owned cooperative.

Limited grants available, specific ranges of disbursement, and set application windows can add pressure to the already competitive grant application process. If you’re evaluating farm grants as a financing option, you’ll want to plan ahead and be prepared.

According to NerdWallet, the popularity of farm grants as free financing can make the application process highly competitive. Meanwhile, the limited number of grants available increases competition, as large numbers of applicants compete for a relatively small number of spots at a national and state level. The number of applicants can vary depending on the type of grant selected.

Different types of grants also offer a variety of ranges in funding. While the ranges can vary widely, there is often a specific cap on the amount of funds that are allocated through a grant.

When searching for grants, you should also be sure to allow ample time before the set deadline. The application process can often be lengthy and may require you to submit documents such as letters of commitment or support from organizations, a work plan and budget, and other information. In fact, the USDA recommends applicants collect required information at least one month prior to the deadline.

There are fewer restrictions of this nature when applying for a farm loan at High Plains Farm Credit. We accept applications throughout the year and funding is not limited by a set number of opportunities available. Our industry experts are always ready to help you navigate financing based on your needs and current situation.

When considering the option of applying for a farm grant, be sure to research any requirements associated with the funds. Pay special attention to information on matching funds, the types of projects and expenses the grant can cover, and any reporting requirements once the grant is awarded. You can check the USDA’s Agricultural Marketing Service (AMS) directory for more information and resources on farm grant terms and conditions.

Not all farm grants require applicants to provide matching funds. However, USDA farm grants may stipulate a cost share match requirement that can reach as high as 100%, in the case of Value-Added Producer Grants.

If you’re considering the best options for funding your farm, ranch, or agribusiness, you likely have exciting projects in mind for your operation. It’s important to select a grant opportunity that fits the ideas you’d like to bring to life.

Farm grants are often designed around specific initiatives that should be considered when deciding if you qualify for the opportunity.

For example, the USDA’s Resilient Food Systems Infrastructure (RFSI) program is available to producers in Kansas pursuing projects that “expand capacity and infrastructure for the aggregation, processing, manufacturing, storing, transporting, wholesaling, or distribution of targeted local and regional agricultural products.”

In another grant available to Kansas farmers, the USDA awards money under the Specialty Crop Block Grant program that is focused on the enhanced competitiveness of specialty crops such as fruits and vegetables, dried fruit, tree nuts, horticulture, and nursery crops.

Other types of grants, like those offered at the state level by the Sustainable Agriculture Research and Education (SARE) program, are dedicated to projects involving research and education. Topical areas for this grant span a wide range of concepts including pest and weed management, pastured livestock and rotational grazing, cover crops, and beyond.

Other types of grants may be broader in their appeal to farmers and ranchers. The USDA’s Value-Added Producer Grant (VAPG), for example, is intended to assist producers in the creation of new products and the exploration of new marketing opportunities.

While the scope appears more broad than that of other types of federal grants, applicants should be aware of specifics related to a qualified use of funds. Allocations are to be used for planning activities (feasibility studies and developing business plans) or certain types of working capital expenses including processing costs, marketing and advertising expenses, and some inventory and salary expenses.

The Federal Register notice for the VAPG program provides an example of detailed stipulations associated with certain farm grants.

Certain types of farm grants (such as VAPG and SARE) will require you to regularly submit financial and performance reports.

While farm grants are often viewed as “free money,” they are not free from regulation and stipulations. It’s important to be aware of requirements that may affect the ways in which you are able to use a farm grant to the benefit of your operation.

Farm loans typically provide greater flexibility when it comes to accessing and utilizing funds. In fact, High Plains Farm Credit offers a variety of farm loan options that can be customized to the unique needs of your operation, instead of the other way around.

With options ranging from operating lines of credit to agribusiness, livestock, and equipment loans, you’ll likely find an agricultural loan that fits your specific needs and goals.

When working with the High Plains Farm Credit team, you don’t have to worry about navigating the complications of searching for grants, selecting the right opportunities, and completing lengthy applications.

Instead, you get to know a group of dedicated experts, backed by more than a century of experience supporting farms, ranches, and agribusinesses, just like yours. You have access to our extensive range of farm loan options but more importantly, you become a customer-stockholder in our cooperative. Flexible loan options, competitive interest rates, patronage dividends, and personal connection with a local loan officer are just some of the benefits of funding your operation with High Plains Farm Credit.

Though High Plains Farm Credit does not offer farm grants, we provide a variety of farm loan solutions to help you succeed. Ready to explore the best options for you, your operation, and your future? Contact our team today!