September 14, 2024
Washington, DC (Highpoint Digest) − On June 03, 2024, Representatives Marilyn Strickland (D-WA-10), Alma Adams (D-NC-12), and Jimmy Panetta (D-CA-19), alongside Senator Peter Welch (D-VT), introduced the Capital for Beginning Farmers and Ranchers Act in the House and the Senate.
The Capital for Beginning Farmers and Ranchers Act directs the Farm Service Agency (FSA) to develop a multi-year operating loan pilot for beginning farmers to finance initial assets and the development of production and management systems. These expenditures can include intangible business infrastructure for crop records, payroll, and regulatory compliance, investments to increase soil fertility, and more.
“The Capital for Beginning Farmers and Ranchers Act proposes an innovative, balanced, pilot loan program that will serve a real need to uplift the next generation of farmers, who often struggle to finance start-up costs and repay loans within the first year of operation,” said Billy Hackett, Policy Specialist, adding that: “The development loans feature flexible, multi-year repayment terms as well as reduced collateral and interest rates with the intent to overcome barriers for new farmers posed by traditional annual operating loans.”
Specifically, the terms of the Beginning Farmer and Rancher Development Loan Pilot Program authorized in the Act would include:
- Direct and guaranteed FSA loans with a repayment term between 3 and 10 years;
- A loan limit of $100,000 for both direct and guaranteed development loans;
- Reduced collateral requirements of not greater than 100% loan-to-value;
- Reduced interest rate between zero and 3%, as determined by the Secretary;
- Flexible principal repayment as determined by FSA, but not less than 1% of the remaining balance annually;
- Robust technical assistance for development loan borrowers; and
- Evaluation and reporting that measure pilot program success.
“If successful, the pilot might even pave the way for lenders, including USDA, to enter into more reciprocal lending arrangements with borrowers, investing in the long-term health of their farm businesses,” continued Hackett.
Source: NSAC
Image Credit: NSAC
