Operating loans fund the expenses that come before revenue in agriculture, such as seed, fertilizer, chemicals, feed, fuel, labor, and repairs. They are often structured as a line of credit that the farm draws on during the season and repays from sales. Commercial banks, the Farm Credit System, and the USDA Farm Service Agency all offer operating credit.
Lenders typically ask for a budget, a cash flow projection, and records of past performance. A clear projection of draws and repayments by week or month helps the farm size the line correctly and gives the lender confidence in the plan.