Government Loan

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midtncattle

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I have read on here about people getting loans for under 2%. When I talked to my office they said around 3.5 on land purchases. Is the lower rate for other types of purchases? Also, I have very good credit. Does this make it impossible to get one of the begining farmer loans?
 
It was relatively easy to qualify for a beginning farmer loan. Just have provide cash flows and show you are qualified to run an operation. The only bad thing is you have to buy the ground first then get the final approval, then wait for funding in order to pay off the bridge loan at the bank.
 
No, that is what the FSA office stated. After poking around on the FSA web page I see that real estate loans are now 3% and Farm operating loans are around 1%. How hard is it to qualify for the farm operating loan?
 
midtncattle":2s568ai0 said:
No, that is what the FSA office stated. After poking around on the FSA web page I see that real estate loans are now 3% and Farm operating loans are around 1%. How hard is it to qualify for the farm operating loan?
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I don't know as much about them. Have a buddy that has his operating notes through the FSA so I will ask him about it some more. I know you cannot make it work like a line of credit it is a more strict amount and not revolving. I believe that it is a similar application process with providing cash flows and income history.
 
Where was your begining farmer loan. Was it with a place like Farm Service Credit?
 
It is through the FSA. Bridge loan is just through my local bank. I won't actually know for a week until the auction if I am going to get the farm and then get final approval.
 
There are several different types of FSA loans as I'm sure that you have learned. The one that I know of that you can get the super cheap interest on is the 5-45-50 program to buy land. You put down 5% of the purchase price, a "commercial" bank lends you 50% at their rates and the gov't will lend you the remaining 45% at 1.5% fixed for 20 years.

There are also direct loans for people who can't qualify for loans from a commercial for land or operating (including capital purchases). I'm not sure what the terms are for these.

Third is a guaranteed loan. This is where you get a loan from a commercial bank and if you stiff them the gov't will make up 90% of their loss after they sell you out.

All of these programs have a bunch of paperwork involved, but for the cheap money a lot of people are willing to deal with it. Also these are targeted to beginning/disadvantaged/troubled farmers. Generally if you can get credit from a commercial bank you won't qualify for the FSA programs. Their whole reason for existing is to help the bottom x% of farmers get back on or get on to their feet-in theory.
 

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