A farmer can borrow from a relative or private individual to set up, buy machinery or fund cash flow, provided a written contract is signed, the funds go to the right borrower, farmer or company, and the loan is declared where required.
Why farmers turn to people they know
Farming needs are heavy and irregular: land, livestock, animal housing, crop advances before harvest. When the bank demands a larger personal contribution, a parent or retired neighbour often completes the financing plan for a new start or a family takeover.
Lending to the farmer or to the farming company
If the farm is run as a GAEC, EARL or SCEA, French farming company forms, the loan can go to the company. A partner who contributes money often uses a partner's current account, governed by a signed agreement approved by the partners.
Business loans and the usury rate
For credit granted to an individual acting for professional purposes, the Code monétaire et financier in principle sets aside the usury ceiling, except for overdrafts. Have a lawyer check this point, because the exact classification of the loan changes the applicable rules.
The banking monopoly limits repeated lending
A private person may lend occasionally to a farmer they know. Lending habitually to several farmers for interest, however, counts as banking operations reserved for institutions licensed by the ACPR, with penalties set out in the Code monétaire et financier.
Fitting the private loan in with start-up aid
A young farmer applying for the installation grant submits a business plan approved by the authorities. A family loan must appear clearly in it, with its schedule; the chamber of agriculture and the installation help desk check that the overall financing is consistent.
Buying land and the notary's role
Farmland purchases go through a notary, and the SAFER, the rural land agency, may use its pre-emption right. If an individual funds the purchase and wants a mortgage, a notarial deed is compulsory; see our page on a private loan before a notary for fees.
Matching repayments to the harvest calendar
A cereal grower earns most of the year's turnover after harvest, a dairy farmer every month. Plan annual or half-yearly instalments, with a deferral in the first year, rather than fixed monthly payments that are impossible to meet in the lean season.
Farm crowdfunding supervised by the AMF
Crowdlending platforms fund farm projects such as anaerobic digestion, direct sales and organic conversion. They must be licensed by the AMF as crowdfunding service providers; how they work is described on our page about crowdfunding between individuals.
Tax for the lender and for the farm
Above 5 000 euros, the loan is declared on formulaire 2062 (French tax form for declaring loans). The lender reports interest received as investment income; for a farm taxed on actual profits, that interest is a financial expense handled by the management centre or accountant.
Fake lenders targeting struggling farmers
After a drought or a slump in milk prices, scammers post quick-loan offers with no paperwork in farming groups. They then demand insurance or transfer fees from abroad, the typical pattern of the international transfer loan scam.
Second-hand machinery financed by a private seller
A seller of a tractor or combine harvester may accept staged payments: this is vendor credit, to be set out in writing with a retention of title clause. Beware of very cheap machinery ads demanding a deposit to a foreign account.
Who to contact when repayments become difficult
If repayments become impossible, warn the lender early and propose a new written schedule. The support unit for farmers in difficulty at the chamber of agriculture and the MSA, the farm social security fund, point to aid schemes and, if needed, an amicable settlement procedure.
Organising a private loan for a farm
- Cost the need using the farm's financing plan and identify the exact borrower: the farmer or the company.
- Draft a loan agreement or current account agreement setting out amount, rate, term and seasonal instalments.
- Pay the funds by transfer into the farm's business account, quoting the contract reference.
- File formulaire 2062 for the loan whenever the amount lent passes 5 000 euros within one calendar year.
- Send the contract to the accountant or management centre so it appears on the farm's balance sheet.
- Review the situation every year after harvest and adjust the schedule by amendment if necessary.
Costs of farm financing between individuals
| Item | Farming specifics | Benchmark |
|---|---|---|
| Agreed interest rate | Usury cap in principle excluded for a business loan, except overdrafts | Freely set, to be checked |
| Notarial deed with mortgage | Compulsory to secure the loan on land | Regulated fees, indicative |
| Crowdlending platform | Commission charged on the funded project | Varies by platform |
| Interest received by the lender | Taxable investment income | Under the tax regime in force |
| Fake quick loan after a crisis | Fees demanded before a payout that never comes | Total loss of the sums paid |
File to prepare on the farmer's side
- Farmer's identity document and Kbis extract or articles of the farming company
- Business plan or forecast approved by the adviser
- Latest balance sheets and income statements of the farm
- Loan agreement or partner's current account agreement
- Bank details (RIB) of the farm's business account
- Schedule aligned with the harvest or sales calendar
- Formulaire 2062 for a loan above 5 000 euros
Mistakes to avoid with a private farm loan
- Paying the money into the farmer's personal account when the borrower named in the contract is the GAEC or EARL.
- Imposing fixed monthly payments on a farmer whose income arrives only once a year after harvest.
- Answering a loan offer posted in a farming group by a stranger who wants fees before any payout.
- Paying a deposit into a foreign account for a used tractor priced far below its usual market value.
- Forgetting to include the family loan in the business plan submitted to obtain start-up aid.
Farmers' questions about private loans
Can a parent finance the takeover of the family farm?
Yes, this is common when a farm is handed down. The loan must be in writing, with a realistic schedule, and kept distinct from a gift, because tax and inheritance treatment differ. A notary helps keep the balance fair for heirs who are not taking over.
Is a partner's current account a real loan?
Yes, the partner lends to the farming company, which owes the repayment. An agreement sets any remuneration and the withdrawal conditions. The accountant records it as a liability; in financial trouble, repayment may be frozen by insolvency proceedings.
Can solar panels on a farm shed be financed this way?
A relative can lend for this kind of project, and some licensed crowdlending platforms fund renewable energy on farms. Check the electricity purchase contract and the total cost, and turn away any canvasser promising private funding in exchange for upfront fees.
Where can a farmer get neutral advice before signing?
The chamber of agriculture, the management centre, a rural notary or a lawyer specialising in rural law can review the draft contract. The MSA and farmers' unions also direct those facing cash flow difficulties towards suitable schemes.