University of Missouri Extension

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Farm Service Agency (FSA) makes loans to individual rural youths to establish and operate income-producing projects.

The projects must be initiated, developed, and carried out by rural youths participating in 4-H clubs, Future Farmers of America (FFA), Family, Career, Community Leaders of America, or similar organizations.

Projects must be planned and operated with the help of the organization adviser, produce sufficient income to meet expenses and repay the loan, provide practical business and educational experiences, while establishing a future credit history for the youth.

-have reached the age of 10, but has not reached the age of 21; (A youth who has not reached the age of majority under State law must obtain a written recommendation from a parent or guardian)

Applicants must also be capable of planning, managing and operating the project under guidance and assistance from a project adviser, i.e., 4-H club advisor, vocational teacher, home economics teacher, count extension agent, etc. The project adviser must recommend the project and the loan, and agree to provide adequate supervision and technical advice. (If a youth has not reached the age of majority under State Law, a parent or guardian must also provide a written recommendation)

These loans may be used to finance nearly any kind of income-producing project. Some common projects include livestock and crop production, show calves, lawn and garden services, mechanical services, Carpentry, Cake Decorating, Catering Service, Greenhouses/floriculture, Seamstress/Alterations, Embroidering, Appliquéing, Roadside Stands, etc.

Loan recipients may use the money to buy livestock, machinery, equipment, sewing machine; bedding plants and supplies; buy, rent or repair needed tools and/or equipment; and pay operating expenses for running the project.

Only projects of modest size can be financed. A modest project is limited in physical size, capital requirements, and overall objectives resulting in a loan as small as $10.00 or any amount up to $5000.00.

Applicants must sign a promissory note and be responsible for repaying the loan. Loan collateral normally consists of crops produced for sale, livestock, equipment and other items purchased with loan funds.

The interest rate for these loans is determined periodically, based on the cost of money to the Government. However, when a loan is made, the interest rate for that loan will not change, but if another loan is made later, the interest rate could be different. The current rate for December 2005 is 4.75%.

The repayment schedule will be worked out with FSA. Payment will be tailored to the type of project for which the loan was made. For example, if the loan is to raise livestock or crops, it would normally be paid when the produce/livestock is sold. If the project is for the purchase of breeding livestock, the loan would be amortized and repaid when the offspring is sold. The first payment would be due no later than 18 months from loan closing.

For more information contact, United States Department of Agriculture, Farm Service Agency, 209 Ash Street, Gallatin, MO 64640. Phone 660-663-3703 or Fax 660-663-3697.


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		University of Missouri Extension Daviess/Caldwell County daviessco@missouri.edu This page was last updated February 14, 2007