So, you’ve decided you want to become a farmer.
There are many things you need to think about when starting a farm. Some of these things are what do you want to produce, where are you going to produce it, how are you going to gain the skills to do so, and how are you going to finance this initiative?
Very few people who are starting a farm from scratch have the disposable income to get an operation up and running, and keep it going all on their own. So where do you find financing?
Aside from friends and family, the obvious choice would be your financial institution. Most banks and credit unions have agricultural specialists that deal with just this sort of thing. They have the knowledge, and expertise to help guide you through the process of securing the necessary funds to match your business needs.
In addition to the traditional banks, there are also lending institutions that specifically focus on the agricultural community. These funding sources tend to offer more specialized financial services to their clients. A couple of examples would be Farm Credit Canada and the Agricultural Credit Corporation (specific to operating costs), both prominent lenders to farm and farm-related businesses in the country.
Depending on where you are at in your business’s lifecycle, you may also be eligible for funding through various government programs. While the government is generally not in the business of providing funding for farming start-ups, there are a number of cost-share programs that support new initiatives that focus on job creation, innovation and economic development. Some examples of these programs are the Jobs and Prosperity Fund, Growing Forward 2 and various grants offered by the Ontario Trillium Foundation.
Another source of funding that is growing in popularity is crowdfunding. This method relies on donations or offering rewards. The rewards would most likely be directly related to the product or service your farming venture would produce. While this method may seem like a means of getting “free money”, it is considered taxable income, and does require a significant amount of project management to get your funding campaign off the ground, promoting it, and delivering on commitments after your campaign is complete. Additional information on the legalities of crowdfunding for a business, especially when it comes to equity crowdfunding, is available through the National Crowdfunding Association of Canada.
Whatever source of funding you decide to pursue for your new farming business venture, always make sure you do your homework and are aware of the risks involved. Having a solid business plan is the best place to start to ensure you are prepared for what you want to do, and how you’re going to do it when it comes to starting your farm business.
Visit Ontario.ca/agbusiness for more information.
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