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Dairy Farm Business loan is primarily availed by farmers, individuals, firms, and business owners to finance their dairy businesses. Dairy Business Loans can be used for various purposes like the purchase of animals that are related to dairy products, farm construction, milking machines, shed construction, dairy items, farm equipment, chaff cutter, and much more. Several lenders offer business loans for dairy farms or farming at competitive interest rates with easy repayment options.
Government loans for dairy farming can be availed by individuals, first-time business owners, farmers, and dairy societies under the NABARD scheme. Further, mentioned are the details of dairy farm loans offered by leading banks and NBFCs along with their eligibility and features.
Eligibility Criteria & Eligible Entities
- Age Criteria: Minimum 18 years and Maximum up to 70 years
- Individuals, entrepreneurs business owners & farmers previously engaged in dairy activities and served dairy sector
- NGOs, Self-help Groups (SHGs), Joint Liability Groups (JLGs), Milk Unions, Cooperative Societies, and Milk Federations are eligible entities
- Applicants with no previous defaults with any financial institutions
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Features:
- Interest Rate: Shall vary from lender to lender and depend on the applicant’s profile and the nature of business
- Loan Amount: Based on the project and business requirements
- Used for purposes like the purchase of equipment, vehicles, storage facilities, chilling units, milk collection infrastructure, etc.
- Repayment Tenure: Up to 7 years
- Project cost: Up to 85% is funded by lenders
- Hassle-free loan process with less paperwork
- Instant loan approvals and disbursals
Leading Banks & NBFCs offering Business Loans for Dairy Farming
Types of Dairy Farm Business Loans
a) SBI – Dairy Farm Business Loan
Usage:
- For the construction of milk houses/society offices
- Purchase of automatic, milk collection systems, transport vehicles, and bulk chilling units
| SBI – Dairy Farm Business Loan | |
| Interest Rate | 7% p.a. (Fixed) for loan amount up to Rs. 2 lakh |
| Loan Amount | Automatic milk collection system – Max Rs. 1 lakh Milkhouse or Society office – Max. Rs. 2 lakh Milk transportation vehicle – Max. Rs. 3 lakh Chilling Unit – Rs. 4 lakh |
| Repayment Tenure | 5 years with a start-up period of 6 months |
| Collateral | Mortgage of landed property or Guarantee of milk union |
| Margin | 15% |
Note: SBI 1 year MCLR with effect from 15th Dec 2022 is 8.30%.
Eligibility:
- Every day supply of at least 1000 liters of milk to milk union
- The last audit result should be an ‘A’ grade
- Last 2 years’ balance sheet – audited
- Last 2 years – Should be in profit
b) Lendingkart Finance- Dairy Farm Loan
Eligibility and Features:
- Farmers and individual entrepreneurs already engaged in dairy activities
- Groups from the unorganized or organized dairy farming sector
- NGOs, Milk Federations, Self-Help Groups (SHGs), and Milk Unions Cooperative Societies can apply for dairy farm loans from Lendingkart
| Lendingkart – Dairy Farm Business Loan | |
| Interest Rate |
|
| Loan Amount | 75% – 85% of dairy project cost |
| Processing Fee | 2%-3% of the sanctioned loan amount (One time) |
| Repayment Tenure | Up to 2 years |
| EMI options | Monthly/Bi-weekly |
| Pre-closure Charges | Nil (1st EMI to be paid in full) |
Documents Required:
- Passport-sized photographs
- Identity Proof: PAN Card, Driving License, Voter’s ID card, Aadhar Card (anyone)
- Residence Proof: Utility Bills (Electricity or water bill) or Ration Card
- Proof of business registration
- Partnership deed (if any)
- Last 6 months’ salary credit details
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c) Bank of Baroda
Scheme for Financing Mini Dairy Units
| Bank of Baroda – Scheme For Financing Mini Dairy Units | |
| Interest Rate |
|
| Loan Amount | Per animal cost as provided by Regional Offices of NABARD of the concerned state |
| Repayment Period | Max. 5 years with 3 months moratorium period |
| Offered to following entities | Farmers, Individuals, Members of NGOs/Self Help Group (SHGs), and Joint Liability Groups (JLGs) |
| Margin | 10% |
| Unit size | Min. 2 – 10 milch animals |
| Security |
|
d) Central Bank of India
Cent Dairy Scheme – 2023
Cent Dairy Scheme offered by the Central Bank of India can be availed by farmers and groups of farmers, individuals, companies, societies, firms, NGOs, etc.
| Limit | Rate of interest % |
| Upto Rs 3,00,000 | 7.80 |
| Above Rs3 Lakh to up to Rs. 10 lakh | 9.10 |
| Above Rs. 10 lakh to up to Rs. 100lakh | 9.70 |
| Above Rs100 lakh | As per the rating of Borrower |
| Central Bank of India – Cent Dairy Scheme | |
| Purpose | To offer finance for establishment of dairy units for milk production |
| Loan Amount | Unit cost excluding Margin Money Based on the viability of the project and repaying capacity of the borrower/s. |
| Processing Fee | Up to Rs. 3 Lakh: NIL Above Rs. 3 Lakh: @0.30% |
| Repayment Tenure | From 3 years – 7 years |
| Inspection Charges | Nil, up to Rs. 2 lakh |
| Security – For loans up to Rs. 1 lakh | Hypothecation of Livestock and other assets |
| Upfront Fee | Up to Rs 3 lakh : Nil Above Rs 3 lakh/- : 50% of 1.25% (i.e 0.625%) |
In addition, to the mentioned banks and NBFCs there are various other financial institutions that offer dairy farm loans to their customers, including Andhra Bank, Canara Bank, Federal Bank, IDBI Bank, Bank of India, RBL Bank, etc.
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How to avail NABARD Subsidy for Dairy Farming
To get a NABARD subsidy for Dairy Farming, the applicant needs to follow the below-mentioned steps:
Step 1: Decide on a suitable dairy activity that falls under the dairy scheme as is eligible for a subsidy
Step 2: Get your business registered as a type of company or an NGO
Step 3: Prepare a business plan to present it to the bank or lender
Step 4: Apply for a bank loan for your dairy business
Step 5: Repay the loan on time in the form of EMIs and the last few EMIs will be waived off by the bank.
Step 6: The waived off EMIs shall get adjusted against NABARD subsidy
FAQs
Q. What is the dairy farm loan repayment period?
Ans. The maximum loan repayment period is up to 7 years for a loan availed for dairy farming.
Q. Is there a grace period on dairy farm loans?
Ans. The grace period offered on dairy farm loans depends on the lender to lender.
Q. Which bank/lender gives dairy farm loans?
Ans. There are various financial institutions offering dairy farm loans include SBI, Lendingkart Finance, Bank of Baroda, Central bank of India, J&K Grameen bank, and many more financial institutions.
Q. Is there any collateral or security needed to avail a dairy farm loan?
Ans. Yes, there is collateral or security required for a dairy loan form by most financial institutions.
Q. Can I get a Mudra loan for dairy farming?
Ans. Yes, you can avail Mudra loan for dairy farming as the purpose of the loan should be income generation.
Q. Can I Avail Dairy Farming Loan from the HDFC Bank?
Ans. Yes, you can avail dairy farming loan from HDFC bank under its allied-activities loan scheme.