Accessing Capital for Beginning Farmers

Farm Service Agency (FSA) www.fsa.usda.gov/FSA/

  • FSA Loans - FSA's loan programs are designed to help family farmers obtain loans and loan guarantees, and conduct business planning. In many cases, these are beginning farmers who need additional financial and business acumen to qualify for commercial credit. In other cases, they are farmers who have suffered financial setbacks from natural disasters, or who need additional resources with which to establish and maintain profitable farming operations. Overview at: www.fsa.usda.gov/Internet/FSA_File/farmloanoverview_12.pdf
  • Farm Ownership Loans - check with staff in your local FSA office. Eligible applicants may obtain direct loans up to a maximum indebtedness of $300,000. Maximum indebtedness for guaranteed loans is $1,214,000 (amount adjusted annually for inflation). The maximum repayment term is 40 years for both direct and guaranteed farm ownership loans.
  • Farm Operating Loans - check with staff in your local FSA office. Eligible applicants may obtain direct loans for up to a maximum indebtedness of $300,000, and guaranteed loans for up to a maximum indebtedness of $1,214,000 (amount adjusted annually for inflation). The repayment term may vary, but typically it will not exceed seven years for intermediate-term purposes. Annual operating loans are generally repaid within 12 months or when the commodities produced are sold.
  • Targeted Funds to Socially Disadvantaged and Beginning Farmers. Each year Congress targets a percentage of farm ownership and farm operating loan funds to socially disadvantaged (SDA) and beginning farmers. For more information, refer to the FSA Fact Sheet, "Loans for Socially Disadvantaged Farmers."

    • Downpayment Program. FSA has a special loan program to assist socially disadvantaged and beginning farmers in purchasing a farm. Retiring farmers may use thisprogram to transfer their land to future generations. To qualify:

      • The applicant must make a cash down payment of at least 5 percent of the purchase price.
      • The maximum loan amount does not exceed 45 percent of the least of (a) the purchase price of the farm or ranch to be acquired; (b) the appraised value of the farm or ranch to be acquired; or (c) $500,000 (Note: This results in a maximum loan amount of $225,000).
      • The term of the loan is 20 years. The interest rate is 4 percent below the direct FO rate, but not lower than 1.5 percent.
      • The remaining balance may be obtained from a commercial lender or private party. FSA can provide up to a 95 percent guarantee if financing is obtained from a commercial lender. Participating lenders do not have to pay a guarantee fee.
      • Financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan.
  • Rural Youth Loans - These are available as direct loans only and have a maximum loan amount of $5,000. Rural youth loans may be made to individuals who are sponsored by a project advisor, such as a 4-H Club, FFA or local vocational instructor. Individuals must be at least 10 but not more than 20 years old to be eligible and reside in a town or city with a population of 50,000 or fewer people.

State Of Iowa

  • Iowa Beginning Farmer Loan Program - The Iowa Beginning Farmer Loan Program (BFLP) is to assist new farmers in acquiring agricultural property. Beginning Farmer Loans are financed by participating lenders or contract sellers with the issuance of federal tax-exempt bonds offered by the Iowa Agriculture Development Authority (IADA). Interest received on contract sales or direct loans by individuals is also exempt from state income taxes. The tax-exempt interest income earned by lenders and contract sellers enables them to charge the beginning farmers a lower interest rate. www.iada.state.ia.us/BFLP/index.html
  • Iowa Beginning Farmer Tax Credit - The Agricultural Assets Transfer Tax Credit is commonly referred to as the Beginning Farmer Tax Credit. The program is administered by the Iowa Agricultural Development Authority and began with the 2007 tax year. The Beginning Farmer Tax Credit Program was enacted by the Iowa legislature as an incentive to keep land in production agriculture, by allowing agricultural asset owners to earn tax credit for leasing their land to beginning farmers. The program includes tax credit for the leasing of agricultural land, depreciable machinery or equipment, breeding livestock, and buildings. www.iada.state.ia.us/BFTC/index.html

Farm Credit Services of America

  • New Farmers Program - Farm Credit Services of America offers a Young & Beginning Program featuring financial benefits for less-established producers. This program is designed for producers age 35 or younger, or with 10 years’ experience or less. https://www.fcsamerica.com/products/young-beginning
  • Agricultural Loans - Qualifying producers can receive real estate loans, operating loans, insurance and more.
  • Youth in Agriculture Loans

    • Individual student market livestock loans, up to $2,500 per student.
    • Designed to give FCSAmerica customer's children practical first-hand experience in business planning and farm financing.
    • Individual student breeding livestock loans, up to $10,205, offer future producers first-hand experience in business planning and farm financing.

Practical Farmers of Iowa

  • Savings Incentive Program - The Savings Incentive Program will entice beginning farmers to save $100 a month for two years; after two years, SIP will match their savings $1:$1. The beginning farmer can then use this savings to purchase a farm asset (like machinery, land, or livestock). The Savings Incentive Program is more than a dollar match. It is a program designed to help beginners succeed. Those enrolled will meet with a farmer mentor and develop a business or whole farm plan. If fully funded, ninety-four farms of beginnings around the state will benefit from this program by 2016.

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