The Farm Service Agency has released a new Fact Sheet about updates to various loan programs under the new Farm Bill. The changes in the Youth Loans are interesting and open the door to agricultural to many more individuals.
But before discussing the changes, what exactly are Youth Loans? Youth Loans are loans to individuals to establish and operate moderate sized projects that produce income in connection with participation in programs such as 4-H, Future Farmers of America, or similar programs. The project must be part of an organized and supervised program of work designed to provide practical business and education experience. Furthermore, the project must be planned and operated with the help of an adviser from the organization and produce sufficient income to repay the loan.
You need to be between 10 and 20 years old to qualify for a Youth Loan. The maximum loan amount is $5,000. The loan can be used to purchase livestock, seed, equipment and supplies; buy, rent, or repair needed tools and/or equipment; and pay operating expenses for the project.
What are the latest changes? First, Youth Loans no longer have a rural residency requirement. This means that a person otherwise eligible for a Youth Loan but who resided in Omaha is now eligible for a youth loan to assist with agricultural projects or business. With the growth of urban agriculture and interest in smaller operations, the elimination of the residency requirement is good news for encouraging even younger beginning farmers to enter the profession.
Second, debt forgiveness on Youth Loans will not prevent the borrower from receiving other federal loans. Importantly, this includes federal student loans. Further, if delinquent on a Youth Loan, a borrower is eligible for federal student loans.
If you have any questions about Youth Loans or FSA loans in general, you are welcome to contact us!