Learn as much as you can about farm finance options 

Maybe you were raised on a farm and always knew one day you would follow in your father’s footsteps, or maybe you grew up in the city or suburbs and longed for a life in the country. Either way, your goal in life is to feed our growing population. So you might ask, “Where do I begin?”

One of the first things you need to do is experience farming firsthand. If you grew up on a farm you might be thinking, “How much more hands-on experience do I need?” 

More than likely, you already have a good skill set on the production side of operating a farm, but now it’s time to develop your skills on the management side. 

A good start would be to rent some farmland from a family member or a neighbor. This will give you experience in budgeting, bookkeeping, purchasing inputs, managing employees, and marketing your crop. Most lenders want you to have a couple of years of experience in operating a farm before they will finance your first farm purchase. These developing years will allow you to purchase some equipment unless you are lucky enough to work out an agreement with a family member or neighbor where you can exchange labor for their equipment. Once you have management experience, your next step may be to purchase your first farmland.

If you have already reached this point, you may have been told you need a bigger down payment than you can possibly afford. By taking advantage of the Farm Service Agency’s (FSA) Beginning Farmer Loan Program, your first farm purchase may not be as difficult as you thought.

Your lending institution, along with FSA’s Beginning Farmer Program, could offer some financing options including the Down Payment Program and the 50/50 Joint Financing Program. With the down payment program, you would place a certain amount down, usually 5 percent with 45/50 Joint Financing between FSA and your lending institution. With the 50/50 Joint Financing Program, there is no down payment and the loan is financed jointly through the FSA and your financial institution. Loan availability is subject to borrower meeting eligibility and credit guidelines.

To qualify for these programs, you will need to decide if you would like to apply as an individual or as an entity.

If you decide to apply as an entity, all members must be related by either blood or marriage and all must be considered beginning farmers. To be considered a beginning farmer, an applicant must not have operated a farm for more than will 10 years. The applicant must have at least three years’ experience on the business side of the farm and sustainably participate in the operation. The property being purchased must not be greater than 30 percent of the average size farm in the county. Applicants must also meet loan eligibility requirements and credit guidelines.

If you are interested in one of these loans, find a FSA Preferred Lender. Utilizing a Preferred Lender for your loan means a faster loan approval! These lenders are also very familiar and knowledgeable on FSA loans and can help you choose one that is right for you. You can find a list of Preferred Lenders by calling your local FSA office.

Kathy Daily is the Managing Director of First Financial Bank’s Farm and Ranch Division. Mrs. Daily has been an agricultural lender for over 25 years.


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