Choosing between an agri term loan and short-tenor working capital can decide how smoothly your season runs—and how quickly you scale. India’s agricultural finance landscape is deepening.
According to PIB, as of March 2024, there were 7.75 crore operational Kisan Credit Card (KCC) accounts with ₹9.81 lakh crore outstanding, underscoring the centrality of short-term credit for input purchases and in-season cash flow. At the same time, medium-to-long-term investment credit remains critical; in FY2025, NABARD disbursed ₹1.9 lakh crore in short-term refinance and ₹1 lakh crore in long-term refinance to support banks’ farm lending.

What is an Agri Term Loan—and when does it fit best?

An agri term loan is designed for asset creation and long-horizon payback. Think agriculture equipment financing (tractors, harvesters), pack-house or dairy unit set-ups, micro-irrigation, solar pumps, or land development. Tenors usually run 3–7 years (sometimes longer), with structured repayment aligned to your farm’s cash generation. For many borrowers, evaluating a farm loan in India, an agri term loan is ideal when:

You’re creating or upgrading productive capacity that yields benefits over multiple seasons.
Cash flows are predictable but lumpy (e.g., perennial crops or a new greenhouse).
You want interest rates and repayment schedules tailored under priority sector agriculture loan norms.

Critically, India continues to push agricultural credit: by December 31, 2024, ₹19.28 lakh crore of ground-level agri credit had already been disbursed against an annual target of ₹27.5 lakh crore—evidence that banks have liquidity and appetite for both investment and in-season credit.

Short-term working capital financing: The right tool for the season

Short-term working capital financing keeps operations moving between sowing and sale. Popular instruments include:

Kisan Credit Card and crop loan (including seasonal crop loan): revolving limits for seeds, fertilizer, diesel, labour, and plant protection.
Invoice financing and accounts receivable financing: unlock cash tied up in trade credit when buyers take 30–60 days to pay.
Warehouse receipt financing: borrow against stored produce to avoid distress sale and capture better post-harvest prices.

For many MSMEs in the agri value chain—aggregators, FPOs, food processors—an MSME agriculture loan structured as a working capital loan can smooth procurement cycles, bridge receivables, and fund short production runs. Policy continues to encourage access: the RBI’s Priority Sector Lending (PSL) Master Directions, March 24, 2025 added incentives—125% weight to incremental PSL in low-credit districts—to push banks deeper into underserved agri geographies.

Agri term loan vs. Short-term working capital: How to choose?

Use this quick lens to decide which instrument fits your immediate need:

Purpose

- Agri term loan: asset creation—tractor, combine, drip irrigation, dairy shed, primary processing.
- Short-term working capital: input purchases, wages, logistics, short cash-flow gaps.

Tenor & repayment

- Agri term loan: multi-year tenor; repayment aligned to harvest cycles and asset life.
- Short-term working capital: 6–12 months (often revolving); interest on utilized amount.

Security & pricing

- Agri term loan: often secured against the asset/land; eligible under agriculture loan India PSL norms.
- Short-term working capital: may be cash-flow backed (KCC), commodity-backed (warehouse receipt financing), or invoice-backed.

Cash-flow impact

- Agri term loan: spreads cost of expansion; improves productivity/quality over time.
- Short-term working capital: protects margins by preventing stock-outs, distress sales, or production stoppages.

Eligibility and application: getting prepared

Most lenders evaluate agriculture loan eligibility on the basis of land ownership/lease documentation (or FPO MSME credentials), cropping pattern, historical yields, credit history, and projected cash flows. Digital rails mean you can now complete a farm loan application online with e-KYC, e-sign, and document uploads. Borrowers should keep soil-health cards, Khasra/Khatauni or lease agreements, past sales invoices, and bank statements ready. For value-chain MSMEs, maintain GST returns, audited statements, and buyer contracts to strengthen accounts receivable financing or invoice financing proposals.

Note that regulatory parameters evolve: in June 2025, the RBI reduced small finance banks’ overall priority sector lending requirement from 75% to 60%, offering them more portfolio flexibility while continuing to support priority sectors, including agriculture—useful context if you bank with an SFB.

Smart combinations that often work

Many successful farms and agri-MSMEs blend both instruments:

Pair an agri term loan for a new cold room with warehouse receipt financing to hold inventory until prices improve.
Finance a harvester via an agri term loan, while running input purchases through KCC/crop loan to keep operations liquid.
Use invoice financing post-dispatch to shorten your cash cycle, while long-term expansion (additional pack-line or a solar pump) rides on a separate agri term loan.

With 7.75 crore KCCs already active and substantial refinance lines from NABARD in FY2025, borrowers have both breadth (short-term liquidity) and depth (long-term investment credit) to choose from—provided proposals are well-documented and cash-flows are realistic.

How Agriwise can help you choose?

At Agriwise, we understand that no two borrowers have the same agricultural finance needs. That’s why we offer both short-term working capital financing and long-term solutions like agri term loans—including structured options such as Loan Against Property. Our expertise lies in helping farmers, agri-MSMEs, and value-chain players evaluate their farm loan options, determine agriculture loan eligibility, and align repayment schedules with seasonal cash flows. Whether it’s an agriculture equipment financing, seasonal crop loan, invoice financing, or warehouse receipt financing to keep your operations liquid, or a customized agri term loan for asset creation, Agriwise ensures that financing works as a growth enabler. With a seamless farm loan application online process and deep knowledge of priority sector agriculture loan norms, we help you access the right credit at the right time—fueling productivity and profitability.

Conclusion

If you’re investing for multi-season productivity, an agri term loan is the right backbone. If you’re protecting margins this season, prioritize short-term working capital. Many agri enterprises need both—sequenced and sized to their cash-flow. Agriwise can help you choose the mix, get the agriculture loan eligibility right, and execute your farm loan application online—so credit fuels growth, not stress.

Disclaimer

The content published on this blog is provided solely for informational and educational purposes and is not intended as professional or legal advice. While we strive to ensure the accuracy and reliability of the information presented, Agriwise make no representations or warranties of any kind, express or implied, about the completeness, accuracy, suitability, or availability with respect to the blog content or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. Readers are encouraged to consult qualified agricultural experts, agronomists, or relevant professionals before making any decisions based on the information provided herein. Agriwise, its authors, contributors, and affiliates shall not be held liable for any loss or damage, including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from reliance on information contained in this blog. Through this blog, you may be able to link to other websites that are not under the control of Agriwise. We have no control over the nature, content, and availability of those sites and inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them. We reserve the right to modify, update, or remove blog content at any time without prior notice.

Rural finance has emerged as a key driver in transforming India’s agrarian landscape in recent years. Among these, agri-infra loans, also known as agriculture infrastructure loans, have catalysed the creation of vital rural assets—warehouses, cold chains, and processing facilities—that empower farmers to enhance their incomes, reduce post-harvest losses, and modernise their businesses. These funds complement existing agricultural finance tools, such as agri-business loans, farm infrastructure finance, and traditional agri loans in India.

Why agri‑infra loans?

Traditional farmer credit often supports input costs—seeds, fertilisers or irrigation—through short‑term products like the Kisan Credit Card, which held ₹9.81 lakh crore outstanding across 7.75 crore accounts as of March 2024, as per the Press Information Bureau. But what about long‑term assets? Enter agri loans for warehouse financing, cold storage loans, and farm asset creation schemes that underpin supply-chain resilience and income optimisation.

Agricultural Infrastructure Fund (AIF): A game‑changer agri loans!

Launched in August 2020, the AIF is a ₹1 lakh crore initiative offering medium- to long-term debt with:

3% interest subvention on loans up to ₹2 crore for 7 years,
Credit guarantee via CGTMSE for up to ₹2 crore,
Tenure up to 7 years, with moratoriums ranging from 6 months to 2 years.

By January 2025, AIF had sanctioned ₹51,364 crore across 84,159 projects—including warehouses, cold storages, processing & grading units. These interventions align tightly with rural infrastructure finance and rural development funding, boosting livelihoods beyond raw production.

“On an average, this Agriculture infrastructure fund initiative has enabled farmers to get 11- 14% higher prices for their produce.” – Shivraj Singh Chouhan, Union Minister of Agriculture and Farmer’s Welfare

NABARD’s role in farm asset creation

The National Bank for Agriculture and Rural Development (NABARD) acts as a key conduit, providing refinance support via its Rural Infrastructure Development Fund (RIDF) and new AMI sub-schemes. In FY 2024–25, NABARD extended a record ₹5,830 crore to Jharkhand alone, financing irrigation, bridges, rural godowns, and cold storage—benefiting over 2 lakh farmers, according to The Economic Times. NABARD also 2024–25 channelled ₹24,500 crore through RIDF, with ₹19,500 crore disbursed.

Additionally, it supports schemes like Gramin Bhandaran Yojana, offering subsidies for rural godown construction up to 30,000 tonnes. These are critical to rural asset creation, enabling cold chain loans and warehouse financing to reach marginal farmers and FPOs.

State-level initiatives: Cold storage & e-Marketing

State governments are also stepping up. In Uttar Pradesh, the state is deploying ₹5,000 crore in agri-infra loans with a 3% interest subsidy to promote cold storage, pack-houses, warehouses, and e-marketing under the Agri Infrastructure Fund and the Self-Reliant Integrated Development Scheme (The Times of India).

Agriwise for agri loans

Agriwise Finserv, a leading NBFC company, is delivering customised agri finance solutions that support rural infrastructure development. Through its seamless digital lending platform, Agriwise provides quick and collateral-backed agri business loans, warehouse financing, and farm infrastructure finance tailored to the evolving needs of farmers, FPOs, and agri-entrepreneurs.

By simplifying access to formal credit loans and partnering with banks, NBFCs, and government schemes, Agriwise bridges the rural credit gap, fostering long-term asset creation. With a focus on transparency, speed, and financial literacy, Agriwise is driving sustainable growth and unlocking the true potential of India’s agricultural sector.

Opportunities: Farmers, FPOs & Agri Entrepreneurs

Agri‑Infra Loans are designed for:

Individual farmers seeking cold storage or warehousing,
FPOs/FPCs building processing and marketing units,
Agri‑startups, SHGs, cooperatives, and rural MSMEs.

Such entities can tap into NABARD AIF, state bank schemes (e.g., SBI’s cold storage loan of up to ₹50 crore, with 10–11% interest over 10 years), CGTMSE guarantees, and central subsidies. Moreover, new initiatives like NABARD’s e-Kisan Credit Card portal streamline the application and disbursement process.

Challenges & the road ahead

Awareness remains a hurdle; many farmers still lack clarity on government schemes for farmers. Under‑financing is also a concern—banks are urged to offer adequate credit for rehabilitation and plans. With agri‐credit projected to surpass ₹32 lakh crore by FY 2025‑26, a 14% increase from FY 2024‑25, accessible infrastructure loans will be key to sustainable rural transformation, as per The Times of India.

Conclusion

Agri loans—underpinned by AIF, NABARD, CGTMSE, agritech, and state-level pushes—are opening new frontiers in rural development funding and asset-based agri finance. Whether you’re a small farmer building a cold storage unit, an FPO creating a grading centre, or an agri-entrepreneur setting up a warehouse, these tools offer affordable, backed credit to scale up, de-risk your operations, and get the most from the land. For those ready to embrace agriculture infrastructure loans, now is a fertile moment.

Tag Archives: agricultural loans

Agri term loan vs. Short-term working capital: Make the right choice!