Higher Off-farm Income Enables Farmers to Borrow More and Increase Investment in Their Operations

Most agricultural lenders extend loans based n their assessment of a borrower's ability to repay debt. Because of this, some farmers may not be able to secure as much credit as they would like for their farm business. A lack of credit could prevent these farmers from expanding production or could restrict investments in productivity-enhancing technologies. Off-farm income may help some farm households qualify for larger loans, which could lead to higher farm output, productivity, and profit.