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Walt Moore For many young farmers there is a deep desire to grow their farming operation. Either through purchasing land or equipment, most are faced with the challenge of getting financed. Young farmers just getting into the business have not had time to build a lot of equity. Because of this, banks will consider the young farmer to be riskier compared to a seasonal farmer. One of the many variables banks will consider is how well the farmer can manage his or her working capital, and without history of that from operations, it\u2019s more difficult for a bank to determine the likelihood of repayment. Today, with low commodity prices and smaller margins between expense and revenue, young farmers are exposed with tough decisions, and banks are tightening their internal lending policies. However, despite this, there are still many opportunities for the young farmer to receive funding.<\/p>\n Community Banks<\/strong><\/p>\n Whether a young farmer is able to get a new farm loan today through a bank or not, it\u2019s crucial that he or she finds a community bank that participates in agriculture lending and starts building a relationship with the bank. New or young farmers should open a business account with the bank and start with small loans first. This process will help the bank clearly see his or her spending habits and repayment behavior. It is a process, and it takes time to build a history with banks, but in the long run it is well worth it. Community banks are willing to make loans with new farmers by participating with agencies such as USDA \/ FSA to help lower their risk exposure with the loan. When it is time to apply for a loan for a new farm, bigger is not always better. A community bank knows which loans are available and how to obtain the best interest rates for a new or young farmer\u2019s borrowing needs. Just like farmers, community banks have deep roots in their servicing area, and they will protect their customer\u2019s needs as well as their own.<\/p>\n USDA \/ FSA <\/strong><\/p>\n The USDA \/FSA offer a variety of loan programs for existing and new farmers. Depending on the amount needed the young farmer will have different options to choose from. One of the best fits for a new farmer is the Micro Loan, which will lend up to $50,000. Loan funds can be used for equipment purchase, startup assistance, working capital, and even family living expenses. The loan application is simple, and FSA understands the need for a new young farmer. Traditionally the farmer will need to have some farm experience, yet FSA will consider an applicant\u2019s small business experience as well as any experience with a self-guided apprenticeship to meet the farm management requirement. FSA also offers direct loans up to $300,000 to the farmers and also will back 95 percent of a guaranteed loan through a bank. It is very important for any new farmer to contact their local FSA office to get more information on their loan programs.<\/p>\n Farm Credit Services<\/strong><\/p>\n In most agriculture communities there are farm credit services that offer loan products for farmers. They are specialized lenders who understand farming and focus strictly on agriculture loans. Many of the companies will have loan products tailored for new or young farmers. For example, Farm Credit Services of America and 1st<\/sup> Farm Credit services offer a loan product for less-established farmers. The program is designed for farmers age 35 or younger, or with 10 years experience or less. There are other companies that offer similar products, so it\u2019s very important for a new or young farmer to reach out and inquire with his or her local farm credit provider.<\/p>\n The most suitable source of money for a farm is personal cash. Having to rely on operating loans, home equity, or family loans, ultimately puts a farm at too great a risk.\u00a0However, there are times when the best route is to apply for a loan. New or young farmers should take time to do the research and find what best option works for them. They should not let the first \u201cno\u201d prevent them from utilizing all the resources that are out there and available for young or new farmers.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Walt Moore UGA SBDC at Valdosta State University wmoore@georgiasbdc.org For many young farmers there is a deep desire to grow their farming operation. Either through purchasing land or equipment, most are faced with the challenge of getting financed. Young farmers just getting into the business have not had time to build a lot of equity. 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\nUGA SBDC at Valdosta State University
\nwmoore@georgiasbdc.org<\/em><\/p>\n