What is rural credit?

Rural credit is any type of program or line of credit that aims to impact the rural population in some way. There are banks and cooperatives that specialize in granting this type of credit to farmers and other people involved in agricultural work. Depending on the nature of the organization, credit schemes may focus on providing mortgage assistance, securing new equipment, or even funding to support research into various aspects of land development in a rural community.

People have access to rural credit options under certain circumstances. For example, start-up farmers and ranchers may receive a loan or line of credit to manage the acquisition and modernization of an existing farm operation or the establishment of a new one. Farmers and ranchers are sometimes given credit of this kind when some sort of natural disaster has ruined crops and threatens the continued operation of the farm or ranch. Some lenders specialize in farm loans by offering highly competitive fixed and variable mortgage rates that allow a farm operation to be refinanced to purchase new machinery or meet some other urgent need relevant to the operation.

Companies can also obtain rural credit in specific situations. This includes the acquisition or establishment of a commercial agricultural operation, or a commercial farm. A company can also obtain development funds as long as the project in question benefits the rural community in which it is based.

In many countries, rural credit is provided under the auspices of national government programs. Often these programs focus on improving the agricultural effort within the country as a means of boosting the economy. With government sponsorship, farmers and ranchers are often able to obtain resources that allow them to maintain their productivity during the growing seasons and then repay loans once the livestock and crops are sold. It is not uncommon for rural credit of this type to be granted as a way of maintaining a balance between imports and exports, ensuring that a certain percentage of crops and other rural products are produced domestically.

Along with government-funded programs, rural credit is sometimes obtained from organizations founded by and for farmers, ranchers, and dairy operators. Local cooperatives often provide much-needed credit to farmers and others, allowing them to receive what they need to run their farms, effectively running an account until the current round of crops is sold. Banks set up to help rural communities often underwrite loans that can be used for everything from building improvements to purchasing large amounts of seeds or other items needed to produce a substantial crop. As with any type of credit option, rural credit seekers must meet the lender's basic criteria and demonstrate a reasonable ability to repay the loan amount or funds borrowed under a line of credit.