How to get a business loan to start an agricultural business in India

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How to get a business loan to start an agricultural business in India

According to the Economic Survey of 2020-21, our country’s Gross Domestic Product (GDP) gets 20{1bd9e2aaa2d300fb575d62c1b417c30e729d45a44f3be7995b7bed395d294a63} of its contribution from agriculture and related activities. In terms of area, India ranks second in owning the most extensive agricultural land in the world. When India’s Gross Value Added (GVA) went down by 7.2{1bd9e2aaa2d300fb575d62c1b417c30e729d45a44f3be7995b7bed395d294a63}, the agriculture sector managed to grab a positive growth rate of 3.4{1bd9e2aaa2d300fb575d62c1b417c30e729d45a44f3be7995b7bed395d294a63}.

The possibilities in the agricultural sector are endless. This primary sector largely contributes to our survival and sustained life in the future. The Government outlook is highly positive, intending to double the income of farmers by 2022.

So if you are someone looking to utilize the benefits of agriculture and want to start an agricultural business in India, you will get a lot of value from this article. Remember, an out-of-the-box agritech business idea will require capital investment and excellent implementation. You need not worry about financial commitments, as agricultural business loans are readily available in India.

Types of Agricultural Loans

Different loans are available for different types of agriculture-related business needs.

Agricultural loans are typically available at low interest rates and come with easy repayment terms. You could get a working capital facility for meeting daily farm needs. Your purpose behind obtaining an agri SME loan could be any of the following:

  • Acquiring agricultural land
  • Purchasing tech-rich equipment to make activities convenient
  • Streamlining production process
  • Purchasing fertilizers and seeds
  • Warehousing

Who Can Apply for an Agriculture Business Loan?

Making a business loan application is easy and can be completed in no time. Anyone with a good credit history and an intent to consistently repay borrowed funds is welcome to apply. You can meet most loan applications online and the lender would directly transfer funds to your bank account.

You will need primary documents like a passport size photograph, identity proof, address proof, and income proof for making an application. Your lender will require you to submit your bank statements and ITR records as a part of the application process. These income details are needed to establish your repayment capability and offer a loan accordingly. 

If you wish to avail of the EMI facility, your lender’s Business Loan EMI Calculator will help you track payment dues. But before finalizing that decision, make sure that you meet the lender’s business loan eligibility criteria.

A person in the age group of 25-65 years can obtain a business loan if their CIBIL score is good. Ensure to have a CIBIL score of at least 700, as anything above that is considered satisfactory. Your business must have the potential to grow in turnover, profits, customer acquisition, and brand reach. Get your financial statements audited by a registered Chartered Accountant before making an application. Make sure that you go through the business loan interest rates and terms of offer of lenders so that you get yourself the right deal.

Pre-requisites of a Business Loan Application

As a borrower, you need to be sure of how you plan to use the borrowed money. If you do not use the funds wisely, it could get you in trouble. Before making a loan application, chalk out a plan of action. That is, how, when and for what purpose do you plan to use the borrowed amount. A goal would bring you on the right trajectory and guide you at all times regarding the course of action to be followed. This plan could also increase the chances of your loan getting approved.


Even though you cannot get a loan solely based on your CIBIL score, your score must remain reasonable. If it is not good already, you can improve it by repaying loans on time and consistently monitoring your account. The future of agriculture seems bright, and many lenders are opening up to agricultural loans — research well before you apply.