NEW PHILADELPHIA, Ohio — It is common knowledge that it is expensive to get in to the farming business. It is especially hard if you are young. And let’s face it, most young people are, well, for lack of a better word, broke!
However, a program through the USDA Farm Service Agency may be able to provide the assistance many young people need.
It is called the Rural Youth Loan program. The program makes operating loans of up to $5,000 available to eligible individuals age 10 through 20 to finance income-producing, agriculture-related projects.
Making it work
Blaine Cline, 13, of Jefferson County, a student at Stanton Elementary, is one of the youth taking part in the program. He bought two Hereford cows with his first loan and paid it back. He then borrowed more to reach his $5,000 limit in 2006 to purchase five beef cow-calf pairs.
“My dad always had cows and I wanted my own,” Cline said.
He proudly admits he has a made a profit off the projects. He has paid back the funds and borrowed more since then to increase his herd size to 12 with more Herefords and crossbred cattle.
Cline said he has learned a lot from the projects including how to manage animals, money and records.
He admits there are some tough times. “But then calving starts and it all gets better. It gives you something to hope for and look forward to,” Cline said.
He shows his cattle during the summer at open shows and at the Jefferson County Fair.
What’s financed
The projects must be educational and developed by rural youths participating in 4-H clubs, FFA or a similar organization.
It must be an organized and supervised program of work, meaning it has to be planned and operated with the help of an adviser, and produce sufficient income to repay the loan and provide the youngster with a business experience in agriculture.
Loan use
These loans can finance many kinds of income-producing agricultural projects. The loan fund may be used to buy livestock, seed, equipment and supplies.
The youth can also buy, rent or repair the tools and equipment they need and can pay operating expenses for the project.
To apply
An applicant must be able to comply with the Farm Service Agency’s general eligibility requirements, meaning they must be between 10 and 20, and they must live in a rural, city or town with a population of 50,000 or less.
In addition, the applicant must submit a completed plan and budget signed by the project adviser and parent or guardian, along with the FSA application for loan assistance.
Interest rate
The interest rate for the operating loan will be determined periodically based on the cost of money to the federal government. After the loan is made, the interest rate will be a fixed amount.
The loan will be secured, in addition to promissory notes, by liens on the products produced for sale and on chattel property, including livestock, equipment and fixtures purchased with loan.
Repayment will depend on the type of project for which the loan is made. This means that if the loans involve raising livestock or crops, the loan is paid when the animals or produce are normally sold.
If a person fails to repay the loan, it will stop them from securing student or any other type of federal loans for education and other purposes in the future.
Local loans
In fiscal year 2009, the New Philadelphia FSA office made 39 operating loans to youth. Since October, when fiscal year 2010 began, 14 young people have been granted loans.
Some students buy livestock such as cattle or goats and others purchase their first tractor. Many use the funds to finance their fair projects.
The interesting thing about the program is that youngsters can get more than one loan, however a youth can not borrow more than a total of $5,000. So if a young person wants to buy some cattle and some hogs, he could get a loan for each project.
For farm equipment or breeding livestock, the loan term can be up to seven years with an annual loan payment.
Success
Lisa Kinsey, farm loan officer for the New Philadelphia location, works with young people and their parents to ensure the projects get the funding they need, and helps to ensure they succeed.
“It teaches kids so many skills, including money management,” said Kinsey.
She added it gives them a chance to see what farming is about, from beginning to end. It teaches them how to price an animal, the veterinary costs involved in keeping the animal, feed costs for the animal and housing costs. Then, at the end it gives them a chance to pay the loan back and hopefully discover a profit.
Apply early
Kinsey emphasized children need to apply early for the loans. Currently, there is a waiting list because funding at many locations, including the one in New Philadelphia, has run out of funds for 2010.
The rural youth loans come out of the same funding as farmers who utilize operating loans, which means the money runs out quickly in the spring.
It will be replenished for 2011 when the new fiscal year begins in October. The important thing is to get the paperwork started and filed with the office, and then it can be processed immediately, Kinsey said.
Youth loan FAQ
Q. Who can apply for a youth loan?
A. To qualify, you must be a citizen of the United States or a permanent citizen. You must be at least 10, but not yet 21, and live in a rural community. The project must produce sufficient income to repay the loan. The goal of the loan is to provide the youth with both a practical business and educational experience.
Q. What basic skills are needed to get a loan?
A. The youth should be capable of planning, managing and operating the project with guidance and assistance from a project adviser. The project adviser recommends the project and the loan and agrees to provide adequate adult supervision.
Q. What can the loans be used for?
A. The loans may be used to finance nearly any agriculturally based, income-producing project. Some common projects include raising and breeding livestock, growing fruits or vegetables for resale, growing flowers or plants for resale and producing field crops. For farm equipment or breeding livestock, the loan term can be up to seven years with an annual loan payment.
Q. What is the most a youth can borrow?
A. The maximum loan amount for a youth loan is $5,000. This can be one loan or a combination of loans with a total of $5,000.
Q. Is it a fixed or changing interest rate?
A. The interest rate is fixed at the time the loan closes.
Q. When can youth apply for an operating loan?
A. Youth need to apply early for the loans. Currently, there is a waiting list because funding at many locations, including the one in New Philadelphia, Ohio, has run out for 2010. It will be replenished for 2011 when the new fiscal year begins in October. The important thing to do is to get the paperwork started and filed with the office and then it can be processed immediately.
To get youth loan information:
— New Philadelphia, Ohio, 330-339-5585
Belmont, Carroll, Harrison, Guernsey,
Tuscarawas and Jefferson counties
— Mount Vernon, Ohio, 740-392-0801
Knox, Morrow and Holmes counties
— Mansfield, Ohio, 419-747-8695
Richland County
— Ravenna, Ohio, 330-297-2187
Lake, Mahoning, Portage, Stark, Columbiana
Summit and Trumbull counties
— Zanesville, Ohio, 740-454-2824
Monroe, Morgan, Muskingum, Noble, Perry,
Washington and Coshocton counties
— Bellefontaine, Ohio, 937-599-5159
Champaign, Delaware, Hardin, Logan, Marion,
Union and Wyandot counties
— Celina, Ohio, 419-586-3149
Allen, Auglaize, Mercer, Shelby
and Van Wert counties
— Easton, Ohio, 937-456-4211
Butler, Dark, Miami, Montgomery and Preble counties
— Georgetown, Ohio, 937-378-6175
Adams, Brown, Clermont, Highland, Pike and Scioto counties
— Jackson, Ohio, 740-286-5208
Gallia, Lawrence, Meigs and Vinton counties
— Lancaster, Ohio, 740-653-4012
Athens, Franklin, Hocking, Licking and Pickaway counties
— Norwalk, Ohio, 419-668-4113
Ashland, Crawford, Cuyahoga, Erie, Norwalk,
Huron, Medina and Wayne counties
— Tiffin, Ohio, 419-447-4687
Hancock, Lucas and Sandusky counties
— Defiance, Ohio, 419-782-4781
Defiance, Fulton, Henry, Paulding,
Putnam and Williams counties
— Washington Court House, Ohio, 740-335-0890
Fayette and Madison counties
— Xenia, Ohio, 937-372-4479
Clark, Clinton, Greene and Warren counties
(Source: USDA FSA)
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Magnificent program! Let’s teach our kids about farming by first teaching them how to get into debt, after all the two go hand in hand don’t they? How about starting smaller, at a scale they can afford by working to earn the up front money and growing the business. After all, if they start small on their own at the age of 12, they have 6 years to build something up before they are “adults”. But, that would make too much sense, we like the idea of saddling agriculture with the need to borrow from the bank and beg for hand outs from the government. Hey Dad, how about paying a 12 year old for working for you and teaching him to save the money so that he can get started on his own. This makes me think people forget we already have a debt crisis in this country.