How to finance a new, small or specialty farm

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Hello again,

Hopefully, planting season is winding down and all your fields are in top shape.

As a quick reminder to those of you with crop insurance, the crop reporting deadline for your spring planted crops is July 15.

Now, we know the days are flying by and it will be July before we know it. Do yourself a favor and call now to make an appointment with your FSA office.

You need to meet this crop reporting deadline to be eligible for other programs at FSA too.

Microloans

In 2012, FSA rolled out a new loan that many of you have taken advantage of but I wanted to give the rest of you a heads up.

Microloans were created for new, small, or specialty farmers, but are great tools for everyone. Up to $50,000 is available.

The need for small operating loans continues to increase for beginning and veteran farmers. Many commercial lenders are not willing to take the risk on smaller, less profitable loans, for a farming operation.

This causes many small farmers to rely on credit cards or personal loans that have high interest rates and less flexible payment schedules, to finance their operations.

If you are unable to get credit elsewhere with reasonable rates and terms, but have a history of being able to meet your payments, this could be your answer.

Two loans

FSA has two types of microloans: operating loans and farm ownership loans. Eligibility requirements and the repayment terms vary depending on which type of loan you need.

Interest rates are determined at the time of the loan approval or closing.

Farm operating loans can cover start-up expenses, seed, fertilizer, utilities, and other things that are essential for the farming operation.

You must have some farm experience to be eligible for these loans, but FSA can count the experience you may have from your own small business or if you are working with a mentor.

Annual operating loans are repaid in a 12-month period or when you sell your products.

Farm ownership loans can be used for purchasing land, constructing new barns or buildings, or paying the closing costs on land.

If you have an EQIP contract with NRCS for a conservation practice, a microloan can be used to cover the up-front cost.

Eligible

You have to have at least three years of farm experience out of the last 10 years. Some of the things that qualify for that experience include military experience.

If you were in the military and were an E5 or higher, you will have completed a leadership course — that counts.

If you were able to successfully pay of a youth loan, took agriculture education past high school or have significant business management, you could be eligible.

Ownership loans have a maximum term of 25 years.

The possibilities for the microloan are nearly endless. Give your local FSA office a call and talk with them about what you want to do.

For more details visit www.fsa.usda.gov/microloans. Remember, we are here to serve you and help you achieve your dreams.

Have a great week,

FSA Andy

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