The paper examines the impact of farm planning and outside financing in the form of short term credit on agricultural incomes and employment even in the very small holdings in Kerala. The paper is based on a sample beneficiaries of a Regional Rural Bank in Kerala. Linear programming technique was employed to study the crop combinations in the existing farm plans and to see the possibility of improving the farm plans with existing capital as well as with larger quantum of capital. The analysis has revealed that net incomes of the borrower farms were uniformly higher than the non-borrower farms both in the existing plan as well as in the optimal plans reworked. It has also been shown that with better availability of credit, farm incomes and employment could be further increased if planned use of all resources takes place.