08 20 2015

How To Reduce Operating Costs for Farmers

08 20 2015

How Farmers Can Reduce Operating Costs

Without access to heavy equipment leasing, the costs that go into farming can greatly hinder a farmer’s ability to operate a profitable agricultural enterprise. These costs include the land, seeds, labor to farm the land and plant the seeds, equipment to make the job less arduous and energy to power the equipment. The machinery and equipment alone can be a major cost in a farmer’s operating budget. Bigger equipment and technological upgrades to machinery have driven up the price of farming costs. Due to this increase in costs, any way a farmer can reduce the overhead expenses associated with agricultural endeavors is a welcome relief.

There are several useful ways farmers can reduce their operating costs to ensure a higher return on their agricultural enterprise. Good machinery managers who make informed choices about acquiring their equipment, trading it and carefully calculating capacity investment can reduce machinery costs by as much as $25 per acre, according to the Iowa State University Ag Decision. One of the best ways to accomplish a reduction in the costs associated with farming is for farmers to finance or lease their farming equipment.

Machinery costs and leasing perks

There are two ways to categorize farming equipment costs. The first method, the annual ownership costs, will occur whether the farmer uses the machinery daily or once a year, and includes equipment depreciation, interest on payments, taxes, insurance and storing the machinery. The operating costs include energy, labor, lubrication and maintenance expenses.

By financing or leasing equipment instead of buying it, farmers can mitigate many of these costs. Leasing reduces the amount of the initial expense of buying the equipment because buying typically requires a substantial down payment.

Leasing equipment ensures farmers stay up to date on the latest technological development with the machinery. Buying a bulky machine that becomes obsolete before the owner pays it off can become a burden rather than an asset.

Obtaining farming equipment through a lease provides more beneficial terms for the lessee. Farmers, especially those with bad credit, will have an easier time finding credit for leasing the equipment rather than getting a business loan to buy it.

Utilize Section 179

In addition to the straight-forward perks of leasing equipment, the government also provides incentives for small businesses – including farmers – to save money through Section 179 of the tax code. Since the government categorizes the payments for leased equipment as off-balance sheet operating expenses, this portion of the tax code lets small businesses write off 100 percent of their equipment leasing payments as a tax deduction.

The IRS does not consider leased equipment as an asset so the Alternative Minimum Tax rule will not affect your tax filings. Since some tax benefits can significantly reduce the amount a business owes in taxes, the AMT creates a threshold for how much can be written off, but leased equipment sidesteps this minimum amount.

Leasing heavy machinery has many benefits for farmers looking for ways to decrease overhead while still ensuring they have high-end equipment.

Find Out How Much Funding You Qualify For

Fields marked with an * are required
By clicking this button I agree to all terms and conditions.

Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.