Starting a farm means paying for a season before you have sold one. Public programs are built for that stage.

Who counts as a beginning farmer

Our agriculture page covers financing across an established operation. This page is for the first years.

Under FSA's rules, a beginning farmer is one who has not operated a farm for more than 10 years and will materially and substantially take part in running it, among other conditions^[1]. An applicant also agrees to take part in any assessment and borrower training FSA requires^[1].

FSA also looks for managerial ability. It can be shown through education, on-the-job training such as an apprenticeship, or farming experience^[2]. If you are new, an apprenticeship or a season working on someone else's farm counts for something.

FSA microloans and operating loans

A microloan is a smaller operating or farm ownership loan made using a reduced loan application^[1]. FSA describes its microloans as being for new, niche and small to mid-sized family farms, and usable for equipment^[3].

Operating loans can pay for livestock, farm equipment, and operating expenses such as feed, seed, fertilizer, pesticides and farm supplies^[4]. When the next season's inputs come due, see crop input financing.

To be eligible for FSA farm loans, a borrower generally must be unable to get credit elsewhere on reasonable terms^[5]. A local FSA office has a list of participating lenders^[5]. For tractors and implements, see farm equipment financing.

What to keep from your first season

The records you keep now are what turn a new farm into a fundable one. Keep them from day one:

• A separate business bank account. Every sale paid into it, every input bill paid from it.
• Sales records. Receipts, grain tickets, sale barn statements and market sales, each dated.
• Expense records by category. Seed, feed, fertilizer, fuel, repairs, labor and rent.
• Production records. Acres planted and yields, or head counts and weights.
• Agreements. Land leases, insurance policies and any contracts with buyers.

A simple written plan helps too: what you will produce, what it costs, and when it sells. Lenders use it to see how a loan would be repaid.

What ROK will want to see from a new farm

ROK's partner application lists at least 4 months in business and at least $10,000 in monthly gross sales^[6]. Those minimums are built for an operation that is already selling. A brand-new farm usually starts with FSA or a local lender, and comes to ROK once it has months of sales.

Lenders commonly look at credit history, cash flow, equity and collateral^[7]. Credit is one input among several. Once you are past ROK's minimums, have these ready:

• Business bank statements for every month you have operated.
• Sales and expense records from your first season.
• Production records and any buyer contracts.
• Land leases, insurance and current debts, including any FSA loan.

ROK Financial and the lenders it matches you with make every funding decision. Our funding readiness guide lists the documents in more detail.

Financing that fits this kind of gap

Which one fits your business, if any, is a conversation to have with ROK’s advisor once they have seen your file. These are the types that usually come up.

• Equipment financingFor a used tractor or a livestock trailer once the farm has sales. ROK describes equipment financing as usable for almost any tangible business asset^[8].How it works
• Business line of creditOnce the operation has a sales history, a line can carry inputs. Draw for inputs in spring, repay after harvest, and draw again next year^[9].How it works
• Term loansFor a one-time project such as fencing, a well or a barn, repaid on a fixed schedule from several seasons of sales.How it works

Related

• Agriculture financing overview
• Farm equipment financing
• Crop input financing