written by | March 22, 2022

How To Get Dairy Farm Loan & What To Look Before Getting It?

Starting any business in India is much easier than it was because of the government and banks' support. Whether you talk about expanding an existing business, or starting something from scratch, getting financial support is easy. Banks offer certain types of loans to help you flourish your business, and it's a win-win situation for both the bank and business people. If you're planning to start a new dairy business or expand your existing one, you'll be pleased to know how small the loan process is for you. So, there's no need to invest all your savings!

Here's an in-depth guide on how exactly the procedure works and how eligible you need to be to avail this loan. Let's start by discussing the purpose of a dairy farm business loan.

Did you know?

Some of the reasons you can get a dairy farm loan include modernising the existing farm, expanding the milk storage house, and establishing automatic milk collecting machinery. The lenders mostly don’t charge a processing fee for this type of loan.

Why Should You Apply for a Dairy Farm Loan?

As mentioned in the intro, the core purpose of such a loan is to financially support you in opening a new dairy business or expanding your existing one. Dairy societies get a lot of benefits from this type of loan for creating infrastructure such as milk collection systems, offices, vehicles, etc. You can avail dairy farm business in cash credit or term loan. Business people take term loans to cope with capital expenditure such as purchasing vans, new shelters, arranging refrigerated units, etc. Cash credit helps fulfil your dairy business's working capital needs. Next, we will comprehensively discuss the interest rates and charges you require to pay on a dairy farm business loan. 

Interest Rates and Other Charges on These Loans

Loan tenure and the amounts borrowed are the two core factors deciding the interest rate on dairy farm business loans. The bank determines the interest rate individually depending on the borrower's repayment capacity.

We'd like to share a few more dairy farm loan-related details.

Loan amount

Ranges from 60% to 85% of the entire project cost.

Loan tenure

Varies from 60- 84 months.

Loan instalments



Generally needed for loan amounts over ₹1 lac.


About 15%.


The following can apply for a dairy loan:

  •  Milk federations, self-help groups, milk unions, cooperative societies and NGOs.
  •  Individual entrepreneurs were involved in dairy activities previously.
  •  Farmers who have been involved in dairy activities previously.
  •  Groups belonging to the organised and unorganised dairy farming industry. 

A few conditions are vital for Cooperative societies to avail dairy loans. Grade ‘A’ is mandatory for the societies to have in their last audit. Their per day average milk supply to its affiliated milk union should be over 1000 litres. Besides, that should have availed pre-tax profits in the preceding two years at which the dairy farm loan is applied.

Also Read: How To Start A Dairy Business

How to Apply for a Dairy Farm Loan?

If you fall in the circle of eligibility we mentioned above, it’s time to start applying for your daily farm loan.

The best option for applying for a dairy farm business loan is to visit your location’s closest bank branch. You can personally meet a bank representative to receive all vital advice and details on loan. They can help you understand the requirements and eligibility for the loan. You can inquire what benefits does the govt. loan for dairy farming offers ways of repaying the loan, etc. Take your time to understand everything. You can apply for the milk dairy project loan from there. It won’t be any tougher than filling some normal forms.

You can apply for these loans online. Undoubtedly, the online method is a quicker one, and you can get in-depth info about the loan on various banks’ websites and understand everything at your own pace. Even if you fail to understand a point or two, you can conveniently call the bank representatives and clear your doubts. These representatives are available 24 x 7.

The documentation you’ll need for your dairy farm business loan is:

  • Application form duly filled
  • ID proof
  • Land records/Project reports
  • Photographs

Features You Should Look For While Applying

First of all, don’t feel confused between tabela loan and dairy loan, as both are the same. But how exactly should be the terms of your loan, and what benefits will come to you? To answer these questions, here we present to you some vital features you should look for before moving ahead in applying for the loan:

  • Hassle-free application process: make sure there are no complications in the application process for the loan. You should need nothing more than certain documents listed, and most of the procedures should be online.
  • Zero processing charges: Today, many banks offer dairy loans without any processing charges included. So, when luxury is already available, why not benefit from it. Also, ensure there are no hidden charges.  
  • The loan amount should form around 75-85% of your entire dairy project expense: For example, if you’ve calculated your dairy farm setup cost to be ₹10 lac, your loan amount should be a minimum of ₹7.5-8.5 lacs.
  • Fast loan processing: nobody likes to hang around for months waiting for the loan processes to complete. The application process must include minimum paperwork and follow very simple steps. The loan process speeds up, and you enjoy immediate aid to begin your business. 
  • Loans for modern-day dairy requirements: Yes, there’s a great difference between a modern-day loan and the one which our forefathers once had. Milk houses, dispersal systems, vehicles, automatic milk collection, bulk milk chilling units, etc., should be covered under your dairy loan.
  • Reasonable interest rates: don’t fall for loans that do offer some attractive benefits but, in return, demand high-interest rates. 2.45% to 4% is the right interest rate for farmers and individuals; it calculates 2.8 % to 6% for Non-individuals.
  • Longer and better repayment periods: The repayment period for the dairy loans you avail of is three years minimum for specific loans. You can enjoy a repayment period of up to 6-7 years.

Also Read: Don’t Miss These Tips On Milk Distribution Business

How Can I Repay the Loans?

You can repay your loan amount in numerous ways. The easiest way is to pay through EMIs. Besides being simple, it’s hassle-free and we all are familiar with this method. You can also choose a loan foreclosure if you’re generating quick profit in your dairy business. In this method, you pay your entire loan amount in one jerk whenever you want after paying your first EMI payment. Sometimes, this method includes a foreclosure penalty charge, but a few banks don’t impose that.

Another method is repaying your dairy farm loan through a gold loan. We all have some gold assets at home and if you face challenges in repaying your dairy loan, you can use such gold jewellery to repay the loan. That way, you neither have to sell your gold nor face any penalties from the bank for delaying the repayment. Getting a gold loan is again not a big challenge today, and you may even get some banks with unbelievably low-interest rates. Most importantly, gold loans are among the fastest processing types accessible today. Later on, once you’ve consolidated your dairy farm business, you can pay back the gold loan amount and bring your gold back home.


There are abundant opportunities for availing a dairy farm loan, and even the government has numerous supportive reforms to support this industry. However, the eligibility channel is a bit tough to pass. If you don’t belong to a dairy farm background or any milk federation, offering dairy farm loans can be pretty challenging for you. If you’ve still got doubts, you can contact the banks’ representatives and clear your doubts.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting


Q: What is a Buffalo Loan Scheme?


The state government of Haryana has recently launched the special buffalo loan scheme for those having buffaloes and cows. You can get around ₹60,000 to buy buffalo and cows.

Q: Is it possible to get a dairy farming loan approval from the HDFC bank?


HDFC bank offers dairy farming loans under its allied-activities loan scheme, which is very flexible considering terms and conditions.

Q: Which banks give dairy farm loans?


Many financial institutions offer dairy farm loans, including Lendingkart Finance, J&K Grameen Bank, Bank of Baroda, SBI, Central bank of India, and many more.

Q: Is any security or collateral required to get a dairy farm loan passed?


Most financial institutions need security or collateral before issuing your dairy loan

Q: What is the repayment period of a dairy farm loan?


Up to 7 years is the maximum loan repayment period for a dairy farming loan.

Q: Is there any grace period on dairy loans?


There’s no single grace period provided on dairy farm loans. It depends on the lender.

Q: Can I avail myself of a Mudra loan for dairy farming?


Yes, it’s possible to avail Mudra loan for dairy farming, but this loan’s core purpose should be income generation, and you should be confident enough in terms of loan payback.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.