HandB
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Has anyone used the young farmers and ranchers loan from USDA to purchase cattle, or know of anyone who did? Just want to hear a little about the ins and outs of it all
buying cattle
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D.R. Cattle
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I've been looking into it, but haven't spoken to a rep or filed any papers yet. I'd be interested to hear about it too.
greenpasture78
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How about loans for young people to purchase land? Gotta have land first before buying cattle!
D.R. Cattle
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The USDA deal offers loans for farms and operating capitol. They are hoping to boost the younger generation to farm as the average age of today's US farmer is 50's, meaning the industry will all be retired in the next decade. Regardless of the incentive, the loan like any other has to be payed back. With today's market value on real estate, it's difficult to buy land for cattle and pay yourself something at the same time. Impossible in my area as the rock bottom stuff in volume around here goes for $3000/acre. I could make it work in North FL/South GA/ South AL, but the move adds complexity to the plan. Still making it work on leased land for now.
I got a beginning rancher type loan back in may from the FSA office. borrowed $28000 to buy 82 heifers at i think it was 3.65% interest. anyway, payments are like $4600 spread over 7 years but i'll probably pay it off in 2-3 years since i had planned on selling about 30 of them once they gained some weight anyway. i plan on moving them this month or next. toying with the idea of buying some pairs in their place..i should at that interest rate.
D.R. Cattle
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Beefy":2vg0gz3c said:
Was it a difficult procedure? Did you offer assets other than the cattle for collateral? Did you have to hire a CPA to draw the paperwork or was it simple? I need the skinny. I've been buying replacements with a zero interest credit line, but 0 interest only lasts 6-9 months. In the long run the FSA loan would be a better option for buying big lots. By the way, $28000 is pretty cheap for 82 head.
No, it wasnt difficult at all. I just sat down with the rep/accountant at the FSA office and basically told him what i wanted to do and how i planned to do it and that i needed $28000 to buy 82 heifers (i should have borrowed a bunch more for that interest rate). Anyway, he sat down and filed the paperwork for me, took about 2 weeks just b/c he was either really busy or out of town and i was out of town during the week too. I didnt have any other assets to offer for collateral.i had to pay $24 for like a processing fee or something and i had to fax in my W-2 form. He had the paperwork drawn up next time and we read thru the agreement and signed and 3 days later the money was in the bank. basically all you need is decent credit and preferably some experience with cattle. Oh yeah, i also have to take a risk management course within 2 years.
This was my first experience borrowing money and i have none of that kind of business sense yet but i'd have to say it was pretty simple.
This was my first experience borrowing money and i have none of that kind of business sense yet but i'd have to say it was pretty simple.
TXBobcat
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D.R. Cattle":3dlx1c45 said:
That's what I was thinking. For $28,000, I would think you could only pick up 30-35 hefiers. Sounds like he got 82 of them for an average of $341 per head.
these were mostly good quality light yearling (and less) heifers that my dad owned and he needed some quick cash for farming so i scratched his back and he scratched mine. we didnt want to have to sell them all since a lof of them are really good quality plus they needed to grow out some. he wanted to help me out getting started and repay me for working all these years. pretty good considering if i sold them all now i'd make about a $19,000 profit but in the long run i'll make a lot more than that from them. like i said, i'll probably sell30-40 of them in the near future. still, the loan and interest rates are great no matter how much you pay for whatever you buy b/c the rates are low and the repayment period is extended over several years. (the rate is fixed at whatever it happens to be when you sign).
greenpasture78
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Beefy,
Did you have land already when you gotten the loans? If not, how were you able to purchase/lease land from loans? Thanks.
Did you have land already when you gotten the loans? If not, how were you able to purchase/lease land from loans? Thanks.
i'm renting pasture from my dad, i have another job, plus i exchange work for some pasture rental. i own no land. if you do own some land it will make it alot easier to get a loan b/c like i said i had no assets to use for collateral and they didnt like that too much, lol.
Overview
The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources. Each fiscal year, the Agency targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers and ranchers.
A beginning farmer or rancher is an individual or entity who (1) has not operated a farm or ranch for more than 10 years; (2) meets the loan eligibility requirements of the program to which he/she is applying; (3) substantially participates in the operation; and, (4) for FO loan purposes, does not own a farm greater than 30 percent of the average size farm in the county. (Note: all applicants for direct FO loans must have participated in business operation of a farm for at least 3 years.) If the applicant is an entity, all members must be related by blood or marriage, and all stockholders in a corporation must be eligible beginning farmers.
Maximum Loan Amounts
Maximum amounts of indebtedness are:
Direct FO or OL: $200,000;
Guaranteed FO or OL: $782,000 (Amount varies annually based on inflation.).
Down Payment Farm Ownership Loan Program
FSA has a special down payment FO loan program to assist beginning farmers and ranchers to purchase a farm or ranch. This program also provides a means for retiring farmers and ranchers to transfer their land to a future generation.
To qualify:
An applicant must make a cash down payment of at least 10 percent of the purchase price.
FSA may provide a maximum amount equal to 40 percent of the purchase price or appraised value, whichever is less. The term of the loan is 15 years at a fixed interest rate of 4 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.
The purchase price or appraised value, whichever is lower, may not exceed $250,000.
Sale of Inventory Farmland
FSA advertises acquired farm property within 15 days of acquisition. Eligible beginning farmers and ranchers are given first priority to purchase these properties at the appraised market value for the first 135 days after acquisition. If more than one eligible beginning farmer or rancher offers to purchase the property, the buyer is chosen randomly.
Joint Financing Plan
Beginning farmer or rancher applicants may choose to participate in a joint financing plan that is also available to other applicants. In this program, FSA lends up to 50 percent of the amount financed, and another lender provides 50 percent or more. FSA will charge a reduced interest rate on the loan.
Where to Apply
Applications for direct loan assistance may be submitted to the FSA local office serving the area where the operation is located. Local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture, Farm Service Agency. For guaranteed loans, applicants must apply to a commercial lender who participates in the Guaranteed Loan Program. Local FSA offices have lists of participating lenders.
For More Information
Further information about this and other FSA programs is available from local USDA Service Centers or on the FSA website at: http://www.fsa.usda.gov.
The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources. Each fiscal year, the Agency targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers and ranchers.
A beginning farmer or rancher is an individual or entity who (1) has not operated a farm or ranch for more than 10 years; (2) meets the loan eligibility requirements of the program to which he/she is applying; (3) substantially participates in the operation; and, (4) for FO loan purposes, does not own a farm greater than 30 percent of the average size farm in the county. (Note: all applicants for direct FO loans must have participated in business operation of a farm for at least 3 years.) If the applicant is an entity, all members must be related by blood or marriage, and all stockholders in a corporation must be eligible beginning farmers.
Maximum Loan Amounts
Maximum amounts of indebtedness are:
Direct FO or OL: $200,000;
Guaranteed FO or OL: $782,000 (Amount varies annually based on inflation.).
Down Payment Farm Ownership Loan Program
FSA has a special down payment FO loan program to assist beginning farmers and ranchers to purchase a farm or ranch. This program also provides a means for retiring farmers and ranchers to transfer their land to a future generation.
To qualify:
An applicant must make a cash down payment of at least 10 percent of the purchase price.
FSA may provide a maximum amount equal to 40 percent of the purchase price or appraised value, whichever is less. The term of the loan is 15 years at a fixed interest rate of 4 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.
The purchase price or appraised value, whichever is lower, may not exceed $250,000.
Sale of Inventory Farmland
FSA advertises acquired farm property within 15 days of acquisition. Eligible beginning farmers and ranchers are given first priority to purchase these properties at the appraised market value for the first 135 days after acquisition. If more than one eligible beginning farmer or rancher offers to purchase the property, the buyer is chosen randomly.
Joint Financing Plan
Beginning farmer or rancher applicants may choose to participate in a joint financing plan that is also available to other applicants. In this program, FSA lends up to 50 percent of the amount financed, and another lender provides 50 percent or more. FSA will charge a reduced interest rate on the loan.
Where to Apply
Applications for direct loan assistance may be submitted to the FSA local office serving the area where the operation is located. Local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture, Farm Service Agency. For guaranteed loans, applicants must apply to a commercial lender who participates in the Guaranteed Loan Program. Local FSA offices have lists of participating lenders.
For More Information
Further information about this and other FSA programs is available from local USDA Service Centers or on the FSA website at: http://www.fsa.usda.gov.
TheBullLady
Well-known member
Being a Realtor specializing in ranches here in Texas, I have closed a few deals with the FSA loan program. There are good things, ie: interest rate can't be beat primarily, but there are also a few things that are not so good.
It's a lot of paperwork to do.. 42 page form here. The FSA is VERY involved with your ranching program from the onset.. you have to have a complete 5 - 10 year plan, which they have to approve, and they will check occassionally to make sure you are sticking to your plan. Once you've set up the plan, it's not flexible, so if you originally plan to get bred cows, and the next year pairs or heifers are a better option, you can't vary from the plan. The other "downside" at least here, is that it may take months to get your deal closed, depending on if there is money available for the program at the time you apply.
It's complicated, but if someone has any specific questions, I'd be glad to answer them if I can.
It's a lot of paperwork to do.. 42 page form here. The FSA is VERY involved with your ranching program from the onset.. you have to have a complete 5 - 10 year plan, which they have to approve, and they will check occassionally to make sure you are sticking to your plan. Once you've set up the plan, it's not flexible, so if you originally plan to get bred cows, and the next year pairs or heifers are a better option, you can't vary from the plan. The other "downside" at least here, is that it may take months to get your deal closed, depending on if there is money available for the program at the time you apply.
It's complicated, but if someone has any specific questions, I'd be glad to answer them if I can.
frenchie
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Green pasture 78 Go buy land thats one of the dumbest things to tell a young cattleman, if you can rent do that instead..greenpasture78
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Frenchie, where did anywhere in this quote did I say to buy land??????? Read before you remark!
greenpasture78":vfgzwt2b said:
C & C Land & Catt
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Frenchie, do not mind him. He does not remeber what he said.
frenchie
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greenpasture78 said:
:roll: :roll: :roll: Greenpasture 78 You are without a doubt ...dumber THAN A BAG OF HAMMERS.
Reread own statement before you REMARK........
greenpasture78
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Your English is real bad.....it said Gotta HAVE land it didn't say BUY land... When I said HAVE it means buy/rent/lease/borrow/inherit land Well, you do need land to put cattle on, eh? So did I outwit the hammers?
frenchie
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Gp 78 and the previous statement was how about loans for young people to purchase land?wHAT DOES PURCHASE MEAN...To obtain in exchange for money or its equivelant....BUY. GP 78 Look out hammers coming.... Sorry too late.. :roll: :roll: :roll:
greenpasture78
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:stop: you simply don't get it! It was an signific question yes it was a Q U E S T I O N! I did not say "go buy" land....
