How to Get a Loan for Cattle

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With the beef industry thriving, raising cattle for sale can result in good profits for ranchers. Even so, because the yield from ranching or farming can vary from year to year, it sometimes is necessary to get a cattle loan for purposes such as maintaining herd size or improving the genetic variance of the herd. Doing this is similar to applying for a loan of any other type in that you have to show the lender that the risk of default is low and that the loan is requested with a specific purpose.

Research the various banks and organizations that provide loans for cattle purchase. These loans may be listed specifically as cattle loans, but they also can fall under the larger umbrella of farm operation or livestock loans. Make a list of the organizations you find, their contact information and whether they have a cap on the number of cattle you can purchase or the amount you can borrow.

Send a written request, either by email or regular mail, to the organizations you have found asking for more information on their livestock, farm operation or cattle loans. If you have circumstances that may jeopardize your chances of getting the loan, be upfront about it and ask if the bank or organization still would consider you if you applied. Some organizations provide much of this information on their websites.

Narrow down your list of cattle loan banks and organizations based on the responses and information you receive, keeping only those agencies that best suit your needs. Download a loan application form from the agencies' websites, request one by mail or pick one up in person.

Contact organizations such as your local stockyard to get a written statement for the average price of the type of cattle you intend to purchase. Agricultural journals and magazines, as well as major agencies such as the U.S. Department of Agriculture also may have information on current sales rates.

Gather documentation that verifies your financial situation and ability to repay the loan. This can include pay stubs, debt agreements, a copy of your credit report, letters verifying supplemental income, or farm business income statements. The documents should show your cash flow and serve as a basis for your repayment plan.

Make copies of all your documentation, including letters and articles you have found.

Create a loan application proposal using your documentation. The proposal should detail why you want the cattle and how you will use them, how the current cost of cattle corresponds to the requested loan amount, your knowledge of or expertise in handling cattle, the steps you will take to minimize risk -- for example, immunization of the cattle -- and the projected return. It also should summarize your financial situation -- preferably using a concise chart -- and detail a repayment schedule, which may be centered around seasonal sale dates or the date of the birth of calves. Attach the copies of your documentation as appendices.

Write a formal cover letter for the proposal and your application. Address the letter to a specific loan officer at the agency at which you are applying. Explain briefly the purpose of the proposal and the potential benefits both you and the lender could gain from providing the loan.

Submit the loan application to the lender and allow the loan officer to review it. It may take some time for the officer to verify your information and ensure it conforms to the agency's underwriting guidelines.

Negotiate with the lending agency's loan officer if he approves your loan application. Iron out the details of the loan contract and sign the necessary paperwork. Terms for negotiation include interest rates, the loan term length, insurance requirements, documentation of animal health until the sale of the cattle, periodic inspection of the cattle habitat or shelter, late payment fees, and circumstances for dismissal or legal action.