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September 25, 2021

Business

Tips to Get a Business Loan to Start an Agriculture Business in India

Agriculture business includes production, farming, management, and marketing of commodities like livestock, vegetables, grains, and fruits. It also comprises resource management, sales of agricultural produce, conservation, and ranching. Agriculture business can be classified as follows:

  • Production resources, which include machinery, seeds, equipment, energy, and fertilizers.
  • Agriculture commodities, such as processed or raw food and fiber items.
  • Facilitative services like transportation, insurance, packaging, marketing, storage, processing, and credit.

Importance and benefits of agriculture business

Almost 60% to 70% of the Indian population is involved in agriculture and allied activities. Moreover, the agriculture sector employs over 52% of the total labor and contributes around 15% to the Indian Gross Domestic Product (GDP).

Agribusiness supplies food, as well as fodder, which is fed to livestock that in turn provides food to people. Several products like tea, spices, sugar, coffee, rice, and much more are exported from India, which provides an excellent opportunity for entrepreneurs.

The agriculture business is also important for healthcare as several plants are used to manufacture different medicines. Moreover, it provides food security to the nation and helps prevent malnourishment.

How to finance an agriculture business

Before looking for financing options, you must prepare an agriculture business plan. You need to identify and conduct research on potential markets, as well as calculate the short-term and long-term viability of the business.

Agribusiness loans are offered by banks, non-banking financial companies (NBFCs), and cooperative societies. Often these are small and medium enterprise (SME) loans with a low rate of interest. The repayment tenure varies from one institution to another, and the amount can be repaid in monthly, bi-annual, or annual installments.

Generally, the loan can be used for buying livestock or cattle, managing daily operations, purchasing equipment, meeting warehousing and storage expenses, or other agribusiness-related purposes.

When you choose SME loan solutions from a reliable lender like Mahindra Finance, you can enjoy the following benefits.

  • Flexible and convenient finance options
  • Quick and hassle-free processing
  • Minimal documentation
  • Customized loan repayment schedule based on your financial situation
  • Competitive SME loan interest rates

Although the exact documents may vary between lenders, some of the basic requirements include land ownership proof, identity proof, and address proof. You may also check your eligibility by visiting the lender’s website. The basic SME loan eligibility norms are as follows:

  • You must be between 18 and 70 years old.
  • The land should be used for agriculture purposes only.

To apply for a business loan and start your agribusiness quickly, visit the Mahindra Finance website today.

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