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Farm Credit Midsouth

Young, Beginning, and Small Farmer Program

Farm Credit Midsouth realizes the future of agriculture rests with the young and eager agriculturalists who want to raise families on their own farms and continue the traditions our local communities hold so dear. However, due to current economic and political trends, the agricultural industry is not always kind to young, beginning and small farmers. In order to encourage and assist these budding agriculturalists, Farm Credit developed a program to meet the specific needs of the next generation of farmers and ranchers.

To qualify, you must meet at least one of the following criteria:

  • Age 35 or younger
  • Less than 10 years of agricultural experience
  • Annual farm production less than $250,000

Benefits of this unique program include:

  • Relaxed underwriting standards.
  • Continuing education program reimburses young, beginning or small farmers 50% (up to $250) when they attend business, production, financial management or ag leadership development events that will better their own operations.
  • Youth loan program loans up to $2,500 to FFA or 4-H members for agricultural income projects at cost.

If you meet the criteria above and farm within our territory in Northeast Arkansas and Southeast Missouri, call or stop by our nearest location to find out more about how we can help you with your operation.

One of the most significant challenges for many YBS farmers with little or no agricultural income or assets is complying with traditional loan underwriting standards. Typically, YBS farmers often have a combination of little or no assets to pledge as collateral, little or no historical production records and little or no on-farm management experience. To provide sound and constructive credit,  Farm Credit Midsouth has adopted the following enhancements to credit underwriting standards for YBS farmers for a five-year period. 

Character

  • Satisfactory credit history, which normally would have a credit score of ≥ 650 and any derogs, must have a written explanation from borrower. 
  • Personal references, other than family members, are to be used and documented to determine character and prior performance on obligations.
  • Risk rating of ≤ 9 at time of approval.

Capacity

  • CDRC percent of ≥ 105% 

Capital

  • Owner's equity of ≥ 40% without a guarantee or strong cosigner.
  • Working capital/AGI of ≥ 5% without a guarantee or cosigner.

Collateral

  • No unsecured loans.
  • A lien on production is required and ≥ 45% L/AV secondary collateral required without a guarantee or strong cosigner. 
  • I.T. loans not to exceed 85% of collateral value and mature within life of collateral. 
  • L.T. loans must have first lien rural real estate with L/AV ≤ 65% without a guarantee or strong co-signer and ≤ 85% with a guarantee or strong cosigner.

Conditions

  • Annual financial reporting is required.
  • Operating loans should not exceed 85% of VFP.
  • Operating loans not to exceed 15 months and must liquidate annually. 
  • An initial on-farm visit is required to verify the condition and quality of the equipment and farms to be operated. 
  • A minimum of one field crop report (2 preferred for first 2 years) required.
  • Written five-year business plan is required in which includes cash flow, capital credit needs; marketing plans and expansion plans.
  • L.T. loans in excess of 65% L/AV should be amortized with equal principal payments when the O.E. is ≤ 50% and not guaranteed or has a strong cosigner.
  • Insurance meaning Farm Credit Midsouth as loss payee is required on all motorized collateral. 

Transaction limit is ≤ $501,000

LOC limit is ≤ $751,000

Start-up Loans

Farm Credit Midsouth will offer a higher risk loan program to beginning farmers (10 years or less farming experience) that cannot qualify under the YBS farmers underwriting standards or traditional credit programs.

Start-up loans will have the same requirements as YBS farmer loans except for the following:

  • No capital requirements.
  • Must have hands-on farming background.
  • Must have support of established farmers in the community i.e. family members or allowing the applicant to use their equipment and/or giving production advice.
  • Must have written rental contracts on productive loan. 
  • Must have a FSA 90% guarantee or be collateralized with insurance and secondary collateral equal to at least 125% of the line of credit.
  • Multi-peril insurance is required at the operations minimum buy up level of 65% on row crops, unless unavailable or other collateral of equal value is pledged.