FSA Andy: The USDA’s youth loan program can lend a hand (and some bucks)

Hello again,

The Farm Service Agency has a loan program to assist rural youth to establish and operate income producing agriculture projects. The youth loan program is connected to participation in 4-H or FFA. The project must be planned and operated with the assistance of their adviser and parents. The project must produce sufficient income to repay the loan.

The goal of the loan is to provide the youth with practical business and an educational experience.

The eligibility requirements for a youth loan include:

  • applicant must be between 10 and 20;
  • must be a U.S. citizen;
  • applicant must live in a rural area or a town of less than 50,000;
  • applicant must be participating in 4-H or FFA or a similar organization;
  • the youth must be conducting a modest, income producing, agricultural project;
  • the 4-H or FFA adviser must provide a written recommendation for the project;
  • and the parents or guardian must provide a written recommendation and consent to the project.

$5,000 maximum

The maximum loan amount for a youth loan is $5,000. This could be one loan or a combination of loans with a total of $5,000. The interest rate is fixed at the time the loan closes. The interest rate for March 2013, for example, is 1.25%.

The loan will be secured by a promissory note(s) and by a lien on the chattel property purchased with the loan funds or products produced for sale. The parents may be requested to cosign the loan.

The repayment schedule for the loan varies with the type of project for which the loan is made. For example, an annual operating loan to plant crops or for feeder livestock is due when the crops or livestock are sold. For farm equipment or breeding livestock, the loan term can be up to seven years with an annual loan payment.

Youth loans can be used to finance many kinds of agricultural projects. The loan funds can be used to:

  • buy livestock, equipment, and supplies;
  • buy, rent or repair needed tools and equipment; and
  • pay operating expenses for the project.

Examples of common projects are beef cows, dairy cows, sheep or goats, grain crops, produce crops, small green houses, farm equipment, or annual livestock projects.

Worthwhile effort

Currently the New Philadelphia Farm Loan team has 74 youth loan borrowers with 88 loans. One young man has his seventh annual operating loan. FFA members can use the FSA youth loan to expand or improve their SAE project. The New Philadelphia office has had 20 youth loan borrowers receive the FFA State Farmer degree and 11 have received the FFA American Farmer degree in the last 10 years. One youth loan borrower has been named the FFA National Swine Production award for 2012.

Additional information on Farm Service Agency rural youth loans can be obtained by contacting your local Farm Service Agency county office or the FSA website at www.fsa.usda.gov and clicking on farm loans. The local Farm Loan team can arrange to make a presentation about youth loans to 4-H, FFA, or other groups.

That’s all for now, FSA Andy

About the Author

FSA Andy is written by USDA Farm Service Agency county executive directors in northeastern Ohio. More Stories by FSA Andy

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