Farm Loans & Poor Credit

Discussion in 'Homesteading Questions' started by 6e, Oct 26, 2006.

  1. 6e

    6e Farm lovin wife Supporter

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    My husband has a friend that's trying to get started in farming, but needs equipment. His credit is not all that great.
    Does anyone know of a credit agency that gives farm loans or farm credit for those with poor credit?
     
  2. big rockpile

    big rockpile If I need a Shelter

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    Loaning for Equipment to someone that is inexperienced,then to top it off Bad Credit.I would say would be hard to do.

    If it was me I would save and buy Used.

    big rockpile
     

  3. rambler

    rambler Well-Known Member Supporter

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    As said, that is a difficult thing. Farm equipment loans are difficult ever since the 1980's, when a _lot_ of farmers & banks were taken down.

    They are considered pretty risky loans, as the equipment is portable, depreciates rapidly, and so on.

    There are the institutions that spcialize in farm loans, but with little experience and bad credit, that will be an uphill battle. Starting farming means one won't get a paycheck for several years - as your friend sees, startup costs are high those first years.

    If he can start slowly, or custom hire some of the work, or start with low-cost used & build himself up a couple years, his track record will help him out then.

    --->Paul
     
  4. Shadow

    Shadow Well-Known Member

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    As every one already said farm loans are hard to get, you have to really prove your self to be above the average. Your friend as already proved something but the wrong something. He is wasting his time untill he gets excellent credit and prehaps some heavy duty farming experence under his belt.
     
  5. rambler

    rambler Well-Known Member Supporter

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    Just to be sure we are on the right track, 'farming' in Kansas is likely many 100 acres, wheat or irrigated crops - correct?

    You are not talking about a couple arce truck/ market garden farm?

    Would be a big difference there. :)

    As well, age and experience makes a big difference. Has this person worked at farming before, and is starting his own place; or is he truely new to farming. If he is young & starting out for the first time, many states have beginning farmer programs, with some grants & special loans if a person qualifies. I do not know if Kansas has such, but would pay to check into that - if the person qualifies as a new, beginning farmer.

    Often one starts out smaller, with borrowed/ rented/ old equipment, & grows into the equity & experience with a full time regular town job.

    --->Paul
     
  6. 6e

    6e Farm lovin wife Supporter

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    I guess when people think farming that's what they think is 100's of acres of crops. What he's actually wanting to do is custom cut hay for people along with his own. He just inherited some land from his dad and so he's just getting started. He needs money for equipment (tractor, baler, swather etc.). I know how hard it can be, as when we got started we had to borrow money from my dad, but that's not an option for him.

    We didn't figure there would be anything out there for him, but I thought it was worth asking. Since he's in his 40's I doubt he'd qualify for beginners farmer. LOL

    Thank you so much for your advice! :)
     
  7. poorboy

    poorboy Well-Known Member Supporter

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    He oughta be able to borrow enough to get in the haying business on the strength of his real estate, wouldn't cost to much if he knows equipment and pick out some good used.:)
     
  8. gottahaveagoat

    gottahaveagoat Well-Known Member

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    As a farm equipment business owner, It is very hard to get financing under their farm name. We have an excellent customers who pays cash and came in about a month ago and tried to finance several pieces of equipment and had problems...Because they always paid cash. Finally had to do it under their personal name and not the farm name. Finance companies can be real picky. Basically paying cash, they had no credit built up. We knew they would be good for it and we would have no problems but NEW Holland was being jerks. The only reason they were financing was because they were getting so much equipment at once.
     
  9. spam4einstein

    spam4einstein Well-Known Member

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    He is lucky. All he needs to do is work hard for a few months and buy the equiptment used to get started. Should be less than 10k. If he already had bad credit and wants to borow money he really dosnt need to get started, that dosnt look good!
     
  10. the mama

    the mama loves all critters Supporter

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    Try USDA, they do have requirements about farming experience. Only costs 15$ to apply.
     
  11. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    By Farming standards, he's just a kid. Most Farmers are in their 60's and 70's.

    Besides, there is no age requirement, but he is expected to have a LITTLE experience!

    He should ask about the Beginning Farmer loans!
     
  12. nodak3

    nodak3 Well-Known Member Supporter

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    To be honest, if I knew of such a place to get loans I would not tell you. Farming, in any sense, be it mega or micro, is a business. Undercapitalization kills start up businesses. Rather, I would tell him to work his butt off, save til Lincoln squeals every time he touches a penny, and start his business when he can afford to start a business.
     
  13. Silvercreek Farmer

    Silvercreek Farmer Living the dream. Supporter

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    The biggest problem with the bad credit is that when you do find someone to loan you some money, they charge you higher interest rates, which instantly sucks the profit out of your endevor. People don't realize the importance of their credit score in the automated loan approval systems that are out there. Keep your credit as perfect as possible for the best loan rates, it can make a huge difference.
     
  14. goatlady

    goatlady Well-Known Member Supporter

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    He does NOT need a farm loan, he needs a small business loan as it sounds like he is figuring the bulk of his income would come from custom cutting. SBA does these types of loans BUT they require a 5-year business plan plus they most probably would require a copy of signed contracts from folks your friend is going to custom cut for. Nobody loans $$ even to those with A+ credit ratings on a "dream" and a "I know I can get the customers" promises. Contracts and written business plans get the loans.