An orchard can be a lucrative venture, but it takes careful financial planning and prudent investing to reap the fruits of your hard work. If you’re looking to secure orchard financing, we’ve got you covered. Private Capital Investors offers orchard loans tailored to help your farm blossom.
This blog provides a comprehensive overview of orchard loans. We’ll explore what these loans are, what types of orchards qualify, how the funds can be used, credit score requirements, and many more.
But first: A quick look at the current state of the orchard industry
The orchard industry is a critical player in the US agriculture sector.
- Apples, in particular, are major export commodities, with over 5,000 apple producers growing 240 million bushels of apples annually (on average) on 322,000+ acres of land. Notably, Washington State produces 70% of apples in the US, and the rest is supplied by other regions like the Hudson Valley in New York, which is famous for its apple orchards.
- Meanwhile, California leads in almond production, supplying 80% of global demand and 100% of commercial supply within the country. California farmers exported over $4.9 billion worth of almonds to the European Union, India, and China in 2019 — roughly 22% of the state’s total agricultural exports.
- Michigan is another major contributor to the US orchard industry. While the state is known for its tart cherries (harvesting 90,000 tons of this fruit each year), it also produces a variety of other fruits, such as apples and peaches. Michigan’s Great Lakes region provides a unique climate suitable for orchard cultivation.
The orchard industry remains profitable because of the increasing demand for fresh and healthy produce. However, it also faces multiple threats — not the least of which is the rising pressure of climate change.
On top of this, orchard owners have to navigate labor shortages and adjust their operations to the growing consumer preference for organic and specialty fruits.
According to the Organic Trade Association, organic produce sales in the US grew by 12% to reach nearly $62 billion in 2020, with fruits and vegetables being the largest category.
Orchard loans can help orchard owners and operators who need financial support to overcome these challenges and capitalize on opportunities.
These loans can also be used by entrepreneurs and investors who want to buy land parcels and develop them into modern orchards that can thrive in a changing climate and competitive market.
In the next section, we explore what orchard loans are and how to qualify for one to grow your agricultural business.
What are orchard loans?
Orchard loans are financial products designed specifically to support owners and operators who need funds to establish, expand, or maintain an orchard business.
Because these loans accommodate the cyclical nature of the agricultural industry, they often provide competitive interest rates and repayment terms tailored to the orchard’s income cycle.
Whether you’re looking to purchase new land, invest in state-of-the-art equipment, manage seasonal expenses, or explore new revenue streams, orchard loans can give you the financial means and flexibility to meet your goals.
What qualifies as an orchard business?
A commercial orchard is a business-focused agricultural operation dedicated to the large-scale production and sale of fruit or nut crops.
Here are the key characteristics that differentiate it from hobby farms:
- Scale– Commercial orchards encompass large areas of land to maximize production. The exact size can vary widely depending on the type of fruit or nut being grown and the geographic location. This is because agricultural loan practices and land values differ across regions and influence the minimum size for commercial viability. For example, orchards growing high-value crops like avocados or almonds might be considered commercial on smaller acreages than orchards producing bulk commodities like apples or peaches. Orchards supplying niche markets or high-end retailers might also be smaller than those serving large-scale processors or distributors. Note that some regions have specific acreage requirements for farms or orchards to qualify for certain agricultural programs or subsidies.
- Business-oriented operation – A commercial orchard’s primary objective is to profit from selling produce. This distinguishes it from a hobby or a subsistence orchard, which are smaller and aimed at personal consumption or local sales.
- Market access – Commercial orchards typically sell their produce through a variety of channels. These include wholesale markets, retail stores, and export markets. Some orchards also generate income by selling directly to consumers at farmers’ markets or on-farm stands.
- Crop diversity – Some commercial orchards focus on a single type of fruit or nut while some grow multiple varieties to diversify their offerings and reduce economic risk. Common crops grown in commercial orchards include apples, pears, cherries, peaches, almonds, and walnuts.
- Infrastructure and equipment – To support large-scale production, commercial orchards typically have significant infrastructure, including irrigation systems, storage facilities, and specialized machinery for planting, pruning, harvesting, and crop processing.
- Professional management – Commercial orchards are managed by professionals who have experience and expertise in horticulture, agronomy, and business management. They implement specialized practices such as pest control, fertilization, irrigation, and crop rotation to maximize fruit or nut yield and quality.
- Compliance – Commercial orchard operators must adhere to strict regulations. These encompass food safety, environmental protection, and labor standards to ensure consumer safety and responsible agricultural practices.
- Investment and capital– Starting and maintaining a commercial orchard requires substantial investment in land, equipment, and labor.
And because orchards often need several years to become fully productive, these business ventures require ongoing financial support during the initial non-productive period.
We offer customizable commercial orchard loans in the $3 million to $50 million range here at Private Capital Investors. If your orchard is more miniature and is not intended for commercial operations, we have alternative funding solutions such as hobby farm loans.
Funding your orchard business
Private Capital Investors offers customizable agribusiness loans that can be tailored to the specific needs of orchard owners. Whether you’re starting from scratch or expanding your orchard, we’ll put together the perfect financial package.
Every orchard has unique financial requirements. This is why we’ll conduct a thorough assessment of your project and identify your exact financial needs before recommending specific orchard loans to you.
Are you seeking alternative lending solutions?
We can also explore other solutions such as agriculture-based hard money and stated income loans, depending on your circumstances.
No matter the specifics of your project, we can help you find the right loan product using our expertise in agricultural finance.
Eligible transaction types
Our orchard loans can be used to fund a variety of requirements. For example, you can use the proceeds to support core orchard operations such as:
- Opportunity purchases – Secure an orchard loan to acquire new orchard land, existing orchards, or related agricultural assets when a profitable opportunity arises.
- Quick closings – With our expedited loan processing, you don’t have to miss out on time-sensitive orchard purchases. You can also use our loans to capitalize on market fluctuations.
- Full-time agricultural activities – Do you need to support the ongoing operations of your full-time orchard business? Use an orchard loan to cover labor, equipment, supplies, and marketing expenses.
- Part-time agricultural activities – We also have loans for borrowers who operate commercial orchards as secondary income sources.
If you have an existing orchard, you can use our orchard loans for expansions and improvements:
- Purchase new farms – Acquire additional land to expand your orchard and increase your current production capacity.
- Expand existing farmland – Do you have an existing agricultural property? You can use our loans to develop new orchard sections within it.
- Renovate existing facilities – Upgrade and modernize your packinghouses or storage facilities to improve the quality of your produce.
Finally, you can use our orchard loans to create additional income and manage your cash flow or cover sudden expenditures:
- Invest in new income streams – Funding from orchard loans can be used to start and grow complementary activities such as agritourism or selling orchard products like jams, juices, dried fruits, or baked goods.
- Short lines of credit – We also offer flexible financing for seasonal expenses and unexpected costs associated with orchard management, such as major equipment repairs.
What credit score do I need to qualify for an orchard loan?
To qualify for our orchard loans, you’ll need a credit score of at least 680. A credit score in the ‘good’ range indicates that a borrower is financially responsible and can manage the loan.
However, while a good credit score is essential, it’s just one factor we consider. Your orchard’s financial health, its operating history, and its future projections also play a role in loan approval.
Get started on your orchard loan application.
Are you ready to apply for an orchard loan? Our team understands the unique needs of orchard owners, so we help you:
- Get the money you need quickly (in as little as 14 days)
- Choose from adjustable or fixed rates, with up to 30-year amortization and no prepayment penalties.
- Take advantage of competitive rates (starting as low as 7%)
We offer orchard loans ranging from $3 million to $50 million across the country, with high loan-to-value ratios of up to 70%. Contact us here at Private Capital Investors to get the funds you need to grow, expand, or sustain your orchard!
