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NWIN | I am also in process of completing a 5/45/50 FSA financing deal. It does take a long time to get funding and there is a lot of paperwork, but if it weren't for this program I would not own 2 30 acre farms. Farm Credit will (at least for me) grant a 1 yr bridge loan once FSA approves your application but before they have funding available. The 1.5% interest rate available is the only way I can bid alongside established farmers at a land sale. They have the advantage on economies of scale but the one way I can level the playing field is with this program (unless they are paying all cash).
I was able to qualify based on lack of down payment even though my cash flow was strong. So if he is serious about buying some land, he needs to dump some of his cash (without going overboard). I'm sure time won't allow in this case but here is food for thought. Say he can buy the neighboring farmstead for $100,000. Invest in infrastructure to help prove to the bank/FSA that he can farm successfully. Grain bins/machinery storage??? Then pay down any other debt he has to free up cash flow. As long as he has enough cash for the 5% down but not enough to qualify for commercial lending then they should approve him. It will depend on your county agent. With the freed up cash flow he should be able to make the payments.
ALso, I was lucky enough to buy my first farm from an absentee landowner that also farmed in another state. He inherited the farm from his late brother. He wouldn't give me a break on price as he was using the proceeds to help buy the farm neighboring his own, but he was patient with me and gave me the time I needed to work the FSA program. Sometimes, that is all it takes. | |
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New Farmer wanting to buy land...
