[permaculture] Beginning Farmer Rates, Make Land Affordable
Johnathan Yelenick
yelenick at riseup.net
Tue Jun 23 02:42:25 EDT 2009
I think I just answered my own question. 2.25% for equipment purchases.
Fancy that!
http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=dfl-do
http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=dfl-ir
Johnathan Yelenick wrote:
> Hum... This is very interesting. I am trying to capitalize our farm
> right now for a csa we are starting. Do you know if there are any loan
> programs like this offered to beginning farmers for equipment? (i.e.
> chisel or yeomans plow, tractors, bed makers, tine cultivators, etc.)
>
> Best,
> Johnathan Yelenick
> Blacktail Permaculture
> South Platte River Watershed of the Short Grass Steppe Prairie Bioregion
>>> Beginning Farmer Rates Make Land Affordable
>>> USDA is offering big benefits to beginning farmers: Who else can
>>> qualify for 1.5 percent, 20-year fixed interest rates on a big chunk
>>> of any farm mortgage? No, that's not a typo. The Farm Service Agency's
>>> Down Payment Program for beginning or limited resource farmers may be
>>> the best deal in decades for someone interested in buying land at the
>>> moment.
>>>
>>> "That's the best rate I've ever seen for a USDA loan program, and I've
>>> worked in farm credit for 27 years," says Greg Beachy with Farm Credit
>>> Services of Mid-America in Louisville, serving Ohio, Indiana,
>>> Tennessee and Kentucky. Borrowers who've stumbled onto the offer are
>>> already backlogged, but he expects a surge of applicants as word
>>> spread. "USDA really is looking for ways to get young people into
>>> farming," he tells me.
>>>
>>> Thanks to the 2008 farm bill, minimum rates on USDA's entry-level Down
>>> Payment Program loans were lowered from 4 percent to 1.5 percent, just
>>> in time to ride the wave of rock-bottom Treasury costs that collapsed
>>> last fall. The deal won't last forever, though, as Treasury rates are
>>> beginning to climb again and the wait list for USDA's matching funds
>>> is growing. So study up.
>>>
>>> A beginner is defined as someone with less than 10 years of farming
>>> experience and who has a substantial interest in the operation. What
>>> they qualify for is pretty special:
>>>
>>> The borrower must pay at least a 5 percent down payment on a property;
>>> FSA will fund up to 45 percent of a $500,000 purchase ($225,000
>>> maximum) at its subsidized interest rates with a loan term of 20
>>> years; commercial lenders who finance the balance of the mortgage must
>>> stretch amortization 30 years. Realistically, that means the borrower
>>> will pay a blend of 1.5 percent interest on 45 percent of a loan and
>>> possibly about 7.7 percent (a typical rate today for a high risk
>>> borrower) on the remainder.
>>>
>>> FSA says 400 borrowers have been approved for the program so far this
>>> year, up from 30 this time a year ago. But funds have been depleted
>>> fast, and Congress will not authorize more money until the fiscal year
>>> begins next Oct. 1, at the earliest.
>>>
>>> As a result, Phil Kimmel, Farm Credit Services of Mid-America senior
>>> vice president for credit, worries that some real estate purchases may
>>> fall through without some extra help from private lenders. "We are
>>> considering a position to offer bridge financing based on FSA's
>>> commitment until funds are available, but we haven't done that yet. We
>>> have provided bridge loans for FSA's portion if we could get security
>>> or maybe a parent to cosign until the money is available," Kimmel
>>> says.
>>>
>>> All Farm Credit institutions are required by law to lend a certain
>>> percent of their funds to young, beginning and small farmers. In 2008,
>>> young farmers under 35 made up 26 percent of FCS of Mid-America's new
>>> loans or leases, and beginning farmers about 40 percent of that
>>> portfolio.
>>>
>>> Rates change periodically on FSA's loan programs; for details see
>>>
>>> http://www.fsa.usda.gov/?
>>>
>>> ? Copyright 2009 DTN. All rights reserved.
>>>
>>> Posted at 08:31 AM CDT, June 11, 2009 by Marcia Zarley Taylor
>>>
>
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