Currently, the USDA youth loan is for kids ages 10-20 years old with a cap of $5,000. “The youth loan program is project based and isn’t meant to be used as a regular operating loan,” said Janet Bollinger, Missouri USDA Farm Loan Specialist. “It’s typically used for youth involved in an FFA or 4-H project.”
Some are calling for a new expanded youth loan program where young and new farmers could enjoy double or triple the current lending limit, and the loan would still be accessible for those with little or no farming experience. “With a few changes in the 2012 farm bill, this program could be the micro credit that the next generation needs,” said Lindsey Lusher Shute, Director of the National Young Farmers’ Coalition. According to Lindsey, in a recent survey conducted by the National Young Farmers’ Coalition, 53 percent of respondents said that lack of capital was their biggest obstacle to starting a farm. One major drawback to an expanded youth loan program is the possible expectation that the loan will be paid back quickly, unlike the current USDA loans that allow for a longer length of payment.
Currently, the USDA offers loans that are already geared toward new and inexperienced farmers who need financing to start up their business. “The two loans currently available are the farm ownership loan and a loan for operational expenses,” said Janet. “Aimed at helping a farmer acquire farm land, the farm ownership rate of interest is kept low – typically around 5 percent and can be repaid over a period of 40 years. The farm must be at least 80 acres to qualify. An operating loan is intended to help the farmer purchase livestock, machinery and other start up expenses and can be repaid over a period of 20 years. Both loans offer financing up to $300,000 each, require a minimum of 3 years of experience, a maximum of 10 years of experience and the applicant must be the actual operator of the farm.”
Diane Cox, Program Technician for the Farm Loan program in Oklahoma shed some light on the current process for an applicant seeking a USDA Farm Loan. “Just stop by your local USDA Farm Loans office and talk with someone about what your plans are. We can help you find the right loan for what you want to accomplish.” Diane said USDA loans typically offer cheaper fixed interest rates than traditional banks and the lending requirements may be more forgiving, which could be key to a young farmer who is just getting their business and credit established.
For more information about the Youth Loan Program, Beginning Farmer Loans or other financial assistance, stop by your local USDA office and ask to speak with someone in the Farm Loan Department. Give that piece of beautiful Ozarks ground a second thought – you just might be able to buy it.
