Wyatt Fraas, the center’s farm and community assistance director, says he advises most of those who are just starting out to apply for loans through the USDA’s Farm Service Agency.
“In the last few years, there’s been a great increase in the number of small and new farmers who’ve gotten into the business,” Fraas says. “The Farm Service Agency responded to that by offering what they call a ‘microloan’ up to $50,000. Before that, they were focused on the larger commodity operations.”
Those larger operations may’ve been working with sums from the hundreds of thousands into the millions of dollars. He says many of those beginning producers have been challenged lately by low commodity prices and the trade war.
“If they’re looking strictly at commodity crops, it’s very difficult to make the cash flow work,” Fraas says. “The Farm Service Agency uses a running average for the prices that they’ll use in those cases, which in this situation works to the farmer’s advantage as far as qualifying for a loan.”
Fraas says it’s critical new producers create a blueprint for their operation that can be shared with the lender.
“It’s helpful for beginners to work up a business plan, something that talks about where their business is going to go, how they’re going to run it and the cashflow parts of it,” Fraas says. “The lender may not want to see the entire business plan. They specifically want to see the finances.”
Fraas says any new farmer who’s looking for advice can contact the Center for Rural Affairs, based in Lyons, Nebraska.
By Jerry Oster, WNAX, Yankton