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Operating Loans

Closeup of crops on a farm

Agriculture loans are an extremely unique subset of the financing industry, which is why we offer various options to help farmers and ranchers run their agricultural operations.

Listen in as Brenham Branch Manager Abby Frank and Pleasanton Branch Manager Sarah Franklin discuss master operating notes, revolving lines of credit, and operating term loans.

We would like to take a few minutes to tell you about how Texas Farm Credit can assist you with the day to day business of your agricultural operation.

From cattle, to row crop, poultry, timber, dairy and so much more, Texas Farm Credit is structured to provide you not only a reliable source of financing, but a business partner you can rely on.

We understand agriculture. With over 100 years of experience in the agriculture industry, we can offer the knowledge, resources, and guidance to help you grow or maintain your operation.

Your success is our success and with our cooperative structure we are able to share that success with you. Through the ownership of stock, purchased at closing, each one of Texas Farm Credits borrowers receives a portion of the companies earning at the end of every year. This dividend is referred to as patronage and allows us to put money back in your pocket, effectively lowering you borrowing cost.

Texas Farm Credit offers a variety of loan products, interest rates, and payment terms designed to help structure a loan that best fits your individual needs. We understand that no operation is the same and our goal is to partner with you to understand your specific goals and needs and help meet them.

We do this by offering three basic types of loans for ag operations and businesses. Those three products are as follow:

  • master operating note
  • revolving line of credit
  • operating term note

Within these three products we can structure funds, terms, and payments to fit your specific operation.

Lets take a deeper look into each one of these loan products:

The Master Operating note is typically best suited for producers that have a fixed yearly input and output. For instance, a traditional row crop farmer projects the number acres he will plant, the crop mix he will plant on those acres, and the amount of inputs required to maintain his crop. This type of loan is typically set up on a yearly basis in which all funds needed for that year’s operation are included in the loan. Repayment for this type of loan is projected based on harvest and commodity/contract prices for that year. This is just one example of how this loan structure can be used. There are many other types of operation suited for this structure and we are excited to discuss your specific operation with you.

Next we will discuss the revolving line of credit. This loan structure is best suited for operations in which inputs and outputs are constantly changing. A Cow calf operation is a good example of how this loan structure is used. A traditional cow calf operator has a foundation heard in which they breed cows for calves that will be sold at sale or placed in a feedlot. A cow calf operator can utilize this loan structure to set up funds for operating inputs and even new cattle purchases. These inputs and purchases are typically ever revolving. For instance the operator will draw funds to pay a lease and buy vaccines, he will then sell a set of calves, pay those proceeds back to his loan and the previously drawn funds will be available to borrow again and so on. This is one basic example of how this loan structure can be used there are many other types of operation suited for this structure and it can be molded to fit your operation.

Lastly, we will discuss operating term note. Operating term notes are best suited for CAPX type expenditures. Whether that be a new tractor, a combine, a set of pivots, or chicken house renovations we can structure these term notes from 1 to 7 years with payment options to fit your operation.

Not only do we offer loan products completely customizable to your operation, each Relationship Manager at Texas Farm Credit strives to understand the ins and outs of their borrower’s business. Through time spent with you in the field touring your operation we can learn firsthand the goals and needs of your specific business. Our mission is to not only become a reliable source of financing but a business partner you can count on.

Call today to learn how Texas Farm Credit can help you grown and maintain your agriculture operation or business.

Frequently Asked Questions

An operating loan is a short-term loan with which farmers can pay ordinary expenses associated with running a farming business and maintaining sufficient working capital. Common operating expenses include seed, fertilizer, equipment maintenance, and employee wages. Some lenders require collateral for operating loans, dependent upon the quality of the farmer’s credit history.


Operating loan lenders examine both the farming business and the farmer’s creditworthiness to determine an acceptable maximum loan amount. An agreement regarding the loan’s terms, including interest rate, repayment duration, and required collateral is then signed by all involved parties. Once all initial requirements are met, the lender transfers funds to the farmer.

About the AuthorAbby Frank

Abby Frank is an Austin county native who has been involved in agriculture her entire life. She joined Texas Farm Credit in 2010 and serves on the Austin County GoTexan Committee, is a member of the South Central Board of Realtors, and a former Texas Land Brokers Network director. Abby’s true joy is in spending time with her two sons, supporting them in their sports and 4-H activities. She also enjoys golf, fishing, and sporting clay events.

Cattle grazing with golden sky

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