Farm loans

Im 37 years old allways helped dad on farm and held a job off the farm. Well were do i start i lost my job do to company closing and most of the ground we farmed for 50+ years is being sold. Land prices here are are $7000-$8000 per acre min so i wont be buying any of it back.
I have been looking for land to buy all over in cheaper areas i found 3 farms for sale that all touch and fell in love with them.
This is my question where does a person go for such a large loan.
Thanks for any help.

A place to start might be Farm Credit Services. They specialize in that type of thing. You might talk to your personal banker as well. Before you go to either it would be a pretty good idea to get a financial statement and paperwork like that together. Maybe a outline of operations too?

I think I would contact the farm bureau in your area. They should be able to point you in the right direction. rw

Check out the Farm Service Agency, branch of the USDA. Here locally they have been great for me, especially on equipment loans. If I'm not mistaken, the intrest rate farm ownership loans is about 3.5 percent right now...can't beat that. Operating loans are going to 2 percent in March....now thats cheap money. Here's the link to the gub'ment's web site.

http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=landing
FSA Website

I hate to sound negative, but the first thing you better do is retake the English classes you must have flunked and learn something about sentence and paragraph structure, punctuation, and capitalization.

If you fill out a loan application or try to describe your plans in writing in the same grammatically disastrous manner as your post, you're doomed before you get started.

Maybe I'm being too harsh, but in the professional world you're attempting to enter neatness and accuracy DO count.

First off, Goose, the fella was asking for help to make a huge business decesion. He is not interviewing to be an english professor. If I were the loan officer, making an ag loan, the english professor would not get the ag loan.

I just co-signed a note with my oldest son, about 5 hours ago, on a 120 acre tract that is mostly row crop in central MO.

We had tried to go through FSA, but they are all screwed up on their funding, and could not work with us till August or there abouts.

Forget the government. Farm Credit did the whole loan for us. They busted their buns and did the whole deal in about 3 weeks.

Look at the mainstream media to get the trend as to what everyone else is doing, then do the opposite.


Gene

I suppose if he wanted an English critique he would have asked for it but I'm sure the topic is ,if my eyes aren't deceiving me, farm loans.
Are you being negative?...Noooo...only insulting.
That's a cheap shot.

Well Eric…GOOD FOR YOU! I agree with the responses below in regards to visiting your local Farm Credit services. They typically will have better rates and terms than a traditional bank. Best of luck to you!

Come on people, this is a forum for Q & A not to criticize or critique!

Lighten up the guy is not filling out the application. He is talking to what we consider friends here on this forum I have a masters and more If I had wrots a thesis I could have gotten a docturate. I don't give the posturure section of a rodent about grammer sentence structure tense. or anything else on this forum. I feel I am just visiting with friends I have and possibly never will meet in person. I'll drink coffee with folks in overalls any time before a suit, sometimes when they still smell a little of the bartnyard.

It's kind of a long shot, but call your congressman's office. With the huge amount of money that's about to flow out of Washington there might be a program to help someone trying to get into business or purchase real estate. The worst that can happen is they won't be able to help, so you may as well ask.

I agree with the others, contact FCS.

My personal experience last week. I'm looking at some land that the purchase price will end up around $500,000. It will take right around $200,000 in cash or other colateral to swing the deal. I'm 20 years older than you and close enough to slowing down that I'm unsure about mortgaging the next 20 years of my life. You are young enough to follow your dream, so if you can swing the financing I'd say to go for it.

BTW, I think the cutoff for the young/beginning farmer programs is 30 years old. I know that when I started 20 years ago I was too old.

Good luck and keep your focus on what you want to accomplish.

I can't wrire or spell any good and it never made any difference when I applied for loans .
By the time I was 21 I owed over 300,000 , not bragging just the truth .
Bank knew how well my english as you say didn't have a damn thing to do with what I knew about farming .

This reply is not racial so read it before you jump to conclusions.
I live in south-- Here we have the FARMERS HOME ADM. which is a govt.arm to help beginning farmers. If a person is a MINORITY, SOCIALY DISAVANTAGED, HANDICAPED, FEMALE, ETC, you can get all the money you need CHEAP. The program is designed to help minoritys & female get into farming. Programs may be structured different in other parts of the country. In some places all the federal offices have been combined so I am not sure about the name FARM HOME ADM.
Contacy your local county agents office for info. in proper direction.


P.S. I apologize to the english teacher for faulty spelling, hope I did not ruin your day.

Are you able to do any business analysis on your own? Most lenders I have dealt with usually like to see some preparation before you meet with them. If you are doing the same type operation you should be able to work up an operating budget which should tell you what you would have left for making payments. Most universities and state extension agencies have worksheets available so you have a template to work off of.
My experience (I'm 45) has been lenders (FSA or otherwise) want a high degree of profitability on any proposal. If your proposal offers slim profitability in a good year, your chances are not good. If you get turned down, don't get too discouraged. Keep tweeking your plan and maybe a lender will go along with you. I think the next couple years will be tough.
Again, doing as much preparation as you can ahead of meeting with a lender inspires confidence.
As far as where to go, commercial ag lenders offer as much as FSA or Farm Credit. I know many good people at FSA but they don't seem to be much of a factor like they were in the 1960's or 1970's. Money seems to be hard to come by with them. Farm Credit at times seems dedicated to an already existing core of customers with little regard to new comers. Just my 2 cents.

I need to apologize. It was Friday night after a long week.

However, over the last year, on a special project with the insurance company I work for, I've reviewed literally thousands of past insurance claims. I've also seen many, many letters written in support of a claim that are completely incomprehendable, written in lead pencil on a sheet torn out of a spiral bound notebook, or some such.

How can I help these people if I can't figure out what they're trying to say? I suspect it works the same way when a loan officer is reviewing a loan app and business plan.

I was wrong for flying off the handle. I apologize. Let's move on constructively.

I just bought out my Bros. share of the family farm[63.3 acres]in Dec.'07. I owned 63.3 acres which helped on the loan. I could not deal with the Bro.so I let my lending banker do that. Made the deal,now I am sole owner [with partner Banker]. I am 68 yrs old with a 25 year loan,wont see it paid off but only have the banker to satisfy. Good people to work with.

I understand goose. Sorry I jumped on you. Thanks for explaining where you were coming from.

Gene

FSA is good but never get a Bank loan gaurenteed by FSA. I have seen what some banks will do, One farm next to me has had four owners in 20 yrs. It was not the farmer fault. The bank was all smiley and happy until they decided to close down. Then they really make the money. On those gaurenteed loan then government covers 90 percent/ Everytime this farm was sold out it was sold at sheriff sale and the bank enged up buying it.and then turned around and set up another unlucky farmer. The bank alway ended up making a big bunch of money. Remember, What the farm brought at the sherriff sale determines the lose the bank suffers. It was a real racket It is terrible to watch them just rape a farm buy selling equipment off of it before they sell the land.
gitrib

Not to ask a stupid question but if you can't afford to keep the land you have now how are you gonna buy some more? Why is the land being sold? Was it repossesed or something? Was it yours or your parents? Just trying to get the whole picture.

Eric,
I am by no means a money guru, but do you have a banker that you can sit down and talk to? When I bought some land a few years ago, the Credit Union would lend up to %60 of the appraised value, you would have to come up with the rest (cash, CD,ect). They will want you to come up with a balance sheet.
When you ask a question on the internet like this, you will get advice alright, some good and some not.
Talk to a loan officer at a lending institution, it won"t cost you anything.
Brian(MN)

Eric-forget most of the "advice" given on this subject-most of it is abuse. You are fortunate to live in Illinois, as they have programs aimed at exactly what you are trying to do. Please visit the website for the Illinois Farm Development Authority.

http://www.il-fa.com/products/agriculture/programs.html

Also visit the University of Illinois Cooperative Extension Service and go to the commercial ag site. Also search "beginning farmers" as they have workshops and seminars designed to assist people starting farming. A good local banker can also help you, but not all rural banks participate in the Illinois Farm Development programs. Don't get discouraged-there are people who can help you. I went through this myself, but fortunately (?) got a good job that allowed me to keep farming some' just not full time.

The owner died and his kids want the money. Land sale today 3 miles away sold for $8750 per acre and property was not as good.
Sorry in my book that does not cash flow!!
1837 acres @ $8750 = $16,037,750.00
This is why i have been looking in other areas were land is much cheaper.

Thanks for all the help everyone. Eric

Well, my wife and I just paid off our farm 2 days ago! 80 acres. If you really look hard, like we did, you may find a person willing to finance the property for you. There's many people that will do this, you just have to reach out and talk to them. There's many reasons for the sellers: they may be older and want a steady 10-20 year income, with the knowledge that if you default, they get their farm back, and get to keep the $ you paid; they may think $ paid over years to them is a better investment than taking the $ and investing it elsewhere. (how many have lost 30-40% doing just that?)
As for you, you may get a simple interest rate, amortized over the period of years, that is affordable. You get ownership rights to the property immediately, subject to your paying the loan as agreed, and finally, you can negotiate the down payment.
This may sound impossible, but it happens and it works. We bought and paid for our farm this way (in Hancock County, Illinois).
As a side, I know plenty of people who are always crying that they cannot afford to buy any ground. I told some friends of mine to talk to our neighbor, who was a retired farmer and looking to sell. I told them to see if he would be willing to sell on terms like this. They all told me he'd never agree; they all found excuses for not buying the ground. Well, I told my brother, and guess what? He now owns 40 acres right next to me! and bought the same way.
My point is, talk to people. You'll get a lot of No's, but all you need is one yes. And they are out there.