Here at AgCountry we pride ourselves in being able to serve agriculture and work with the next generation that looks to start a career in the industry. The one thing I often hear from tenured loan officers is that they enjoy being able to work with multiple generations. It can often be challenging coming back to the farm, as there can be a lot of unknowns. And I think that’s the one importance of being able to work with one of our many knowledgeable employees, we understand it. There is a variety of different options for young/beginning farmers that is offered.
First off, what makes you eligible? A young farmer is defined as anyone aged 35 or younger. A beginning farmer, on the other hand, doesn’t have an age limit. Anyone with 10 years or less of farming experience falls into this category. The 10 years of farming is often determined by when you start full-time farming or filing a Schedule F on your tax return.
As mentioned, we understand that getting started can be challenging. We know that you may only operate a few acres to start, or that other key financial ratios are not met. So, we have come up with some exceptions to our credit standards. Each of these exceptions are considered on a case-by-case situation. The big-ticket item for a young, beginning farmer is financing and structure. We want to make sure your financial situation works for you in today’s environment, but also want to make sure things remain viable when we go through more challenging times. Since we never know when opportunities may arise, we want customers to be in a strong position to capture them when they do.
It is our goal to be able to spend more time with young producers to help them achieve their goals. We are invested in your operation and the future of agriculture. One thing I like to discuss with my customers is break-even analysis. This gives a starting point to help understand their cash flow. We spend a lot of time looking at the market or prices, so understanding your break-even is critical for a young/beginning farmer.
We cannot stress how important it is that we plan for the future of your operation, which allows you to structure debt accordingly. Again, we want to set things up from a cash flow perspective that may allow for future opportunities. One program that has allowed us to accomplish this is Farm Ownership Loans through the Farm Service Agency (FSA). In specific, the Down Payment Program, also known as the 5/45/50 program. Here, you are required to put a 5% cash down payment with FSA financing 45% and AgCountry taking the remaining 50%.
Let’s run through an example:
Purchase Price = $600,000
5% Down Payment = $30,000
45% FSA = $270,000
50% AgCountry = $300,000
Now what are the terms, you may ask? FSA’s portion is set up at 1.50%, which is amortized over 20 years. AgCountry terms are typically amortized over 30 years and the rate is subject to the best rate product at the time. The good thing to know is that we have countless rate options available. The program allows for younger or beginning producers that may not have a large cash down payment or additional collateral to pledge toward the transaction. The other benefiting factor is that it also allows you to preserve cash in today’s environment. We know that it takes more to grow a crop in today’s environment and that inflation has impacted the whole industry. However, this program has shown to be beneficial across our association.
I highly recommend you contact your loan officer or an AgCountry office for more information. It’s also important to note that AgCountry is a preferred lender with FSA, so we can help streamline the approval process.
We look forward to serving you & the next generation of agriculture.
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