See national chem pricing trends in the FBN Research report
Investing in on-farm grain storage is a powerful decision that can transform your farm's profitability and operational efficiency. Securing the right financing is the bridge to making that investment a reality.
View grain bins as an asset that generates returns through improved market timing, quality preservation, and operational savings. A comprehensive cost analysis, a robust business plan, and a clear understanding of your financial health are non-negotiable.
The grain bin financing application process typically involves four broad steps, outlined below.
To start the grain bin financing process, you must first determine which type of grain bin is the right fit for your operation as their characteristics directly influence cost and, by extension, financing needs.
Steel grain bins are the most common type of on-farm storage due to their versatility, durability, and cost-effectiveness. They come in two primary configurations:
Hopper Bottom Bins: These bins have a conical bottom that allows grain to flow out by gravity, making them ideal for frequent loading and unloading, such as for feed or seed. They typically range from 1,000 to 30,000 bushels in capacity.
Flat Bottom Bins: Designed for larger capacities and longer-term storage, flat bottom bins require an auger or conveyor system to fully unload the grain. They are the workhorses of large-scale on-farm storage, with capacities ranging from 10,000 to over 1 million bushels.
Common features to consider, which also add to the overall cost, include:
Aeration Systems: Fans and ducts to circulate air, control moisture, and cool grain.
Stirring Machines: Equipment to mix grain, aiding in uniform drying.
Unloading Systems: Augers, conveyors, and sweep augers for efficient grain removal.
Temperature Cables: Sensors to monitor grain temperature, alerting you to potential hot spots.
While less common for new on-farm grain storage compared to steel bins, concrete silos are still used, especially for feed storage or in older farm setups. They are often used for silage, high-moisture corn, or as part of larger feed mill operations.
Although they are extremely durable, offer a long lifespan, and have excellent insulation properties, concrete silos often have higher initial construction costs, are less flexible for expansion, and typically require specialized unloading equipment.
It's worth noting that temporary solutions like grain bags or outdoor piles are also available. While they offer a low-cost, short-term solution for overflow, they come with significant limitations compared to permanent bins:
Limited Quality Control: Higher risk of spoilage, pest damage, and moisture issues.
Labor Intensive: More manual handling for loading and unloading.
Short-Term Viability: Not suitable for long-term storage or maximizing market opportunities over several months.
The type of bin you choose directly impacts the financing required:
Cost Variations: Steel bins generally have a lower per-bushel cost than concrete silos, making them more accessible for many farmers. A 50,000-bushel steel bin might cost $3-5 per bushel installed, while a similar capacity concrete silo could be significantly higher.
Lender Perspectives on Different Assets: Lenders are generally comfortable financing steel grain bins due to their widespread use, established market value, and relatively straightforward installation. Concrete silos, being more specialized and less liquid assets, might face different lending criteria.
Once you've done your homework and chosen a financing partner, the application process requires careful attention to detail and organized documentation.
Being prepared with all required documents will expedite the application process. Expect to provide:
Personal Financial Statements: Including assets, liabilities, and net worth.
Farm Financial Records: Including income statements (for the past 3-5 years), balance sheets (current and historical), and cash flow statements (projections for the coming years, specifically demonstrating your ability to repay).
Tax Returns (Personal and Business): Usually for the past 2-3 years.
Farm Business Plan and Projections: As detailed in Chapter 5, showing the viability of the investment.
Grain Bin Quotes and Specifications: Detailed proposals from your chosen grain bin supplier, including all components and installation costs.
Land Titles or Lease Agreements: Proof of ownership or long-term lease for the land where the bin will be constructed.
Navigating the world of agricultural finance can seem daunting, but several avenues are available to help you fund your grain bin investments. Each option comes with its own set of advantages, disadvantages, and specific requirements.
Commercial banks are a common source of financing for grain bins through commercial agricultural loans. These are typically term loans, meaning they have a fixed repayment schedule over a set period.
You can choose between a fixed interest rate, which offers predictability by remaining constant for the life of the loan, or a variable rate, which fluctuates with market interest rates, potentially offering lower initial payments but more risk. Current agricultural loan rates might range from 6% to 10% APR, depending on the market and borrower's creditworthiness.
Lenders will typically require the grain bin itself as collateral. They may also ask for additional collateral, such as land, other farm equipment, or a general lien on farm assets, especially for larger loans or less established borrowers.
Repayment terms for grain bins often range from 7 to 15 years, structured with monthly, quarterly, or annual payments to align with a farm's cash flow.
The U.S. Department of Agriculture's Farm Service Agency (FSA) offers specialized loan programs designed to help farmers, including Farm Storage Facility Loans (FSFL) for on-farm storage. FSFLs are one of the most common options for grain bin financing.
Farm Storage Facility Loans are open to most agricultural producers who can demonstrate a need for storage. Requirements include having a satisfactory credit history, being unable to obtain sufficient credit elsewhere at reasonable rates and terms, and meeting certain farm size and income limitations.
FSFLs offer highly competitive, often fixed, interest rates, which are typically tied to the cost of money to the U.S. Treasury. Rates can be significantly lower than commercial bank rates, sometimes in the 2% to 4% range. Loan terms can extend up to 12 years, depending on the loan amount.
FBN Finance offers a modern approach to agricultural lending, specializing in solutions tailored to farmers' unique needs.
With a streamlined, online application process designed to reduce the time and paperwork often associated with traditional lending, FBN Finance allows you to focus more on your operation and less on the application process. FBN Finance has financed over $2.5 billion to farmers across the U.S. to date.
Many grain bin manufacturers and their authorized dealers offer their own financing programs, often in partnership with financial institutions. You can commonly arrange financing directly through the dealer where you purchase the bin, simplifying the process.
They sometimes offer special promotions or incentives, which might include low-interest rates for a limited period, deferred payments, or special discounts on bin packages.
But be sure to always read the fine print. While attractive, these programs might have specific eligibility criteria, higher rates after promotional periods, or require certain down payments.
After submitting your application, the lender will begin their review. The lender's underwriters will thoroughly review all your submitted documents to assess your creditworthiness, the financial viability of your farm, and the risk associated with the loan.
For larger loans, the lender may require an appraisal of your farm assets or an inspection of the proposed bin site.
The approval timeline can vary significantly depending on the lender and the complexity of your application. Traditional banks can take several weeks, while specialized lenders like FBN Finance offer a faster, more streamlined process, approving loans in days, not weeks.
By carefully considering your needs, exploring available financing options, and partnering with a lender who understands agriculture, you can make a smart investment in grain storage that pays dividends for years to come.
When you're weighing your grain bin financing choices, remember that FBN Finance offers excellent rates on land loans that can be used to fund on-farm grain bin storage.
Our deep commitment to helping farmers succeed is evident in every aspect of our service. We're proud to say that many on our finance team have farming backgrounds themselves, which allows us to offer practical financial solutions, including operating lines and equipment loans, that fit your needs.
We've already helped farmers across the U.S. secure over $2.5 billion in financing, a testament to our proven expertise and dedication to supporting farm growth and infrastructure. Plus, we've designed our application process to be fast and entirely online, so you can spend less time on paperwork and more time focused on what matters most: managing your farm.
Click here to start your application today.
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Financing offered by FBN Finance, LLC and its lending partners. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify. NMLS ID 1631119.