The Farm Service Agency has a loan program to assist rural youth establish and operate income-producing agriculture projects. The youth loan program is connected to the youth’s participation in 4-H or FFA.
The project must be planned and operated with the assistance of the youth’s adviser and parents and 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 years of age; 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; the youth must be conducting a modest, income producing, agricultural project; the 4-H or FFA Advisor must provide a written recommendation for the project; and the parents or guardian must provide a written recommendation and consent to the project.
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 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 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, farm equipment or annual livestock projects
Currently the New Philadelphia Farm Loan team has 70 youth loan borrowers with 79 loans in the six-county area. The projects include 43 with beef cow-calf, five dairy cows, five sheep and goats, three with swine, four with annual operating loans, five with equipment purchases, and five financed a building to house their annual livestock project.
Several youth with beef cow-calf projects paid off their first loan and obtained a second loan to purchase additional beef cows to add to their herd. One young man paid off four annual operating loans and has obtained his fifth loan.
A 12-year-old girl borrowed $5,000 to purchase four purebred Boer billy goats and 35 nannies. Each year she sold club kids and meat goats. At the end of five years she had increased her goat flock to 70 nannies, had paid off her youth loan and paid her annual operating expenses. She received the American FFA degree — the highest FFA award — at the 2010 National FFA Convention.
Additional information on Farm Service Agency rural youth loans can be obtained by contacting your local Farm Service Agency county office or visiting 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.
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