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What New Farmers Need to Know about Starter Loans

If you’re considering starting your own farm or have already decided to take the leap, chances are you’ll need to have some kind of financing to help get your operation going. The good news is that you have options. Starter loans are designed to consider factors beyond financial history and consider things like school or work experiences, strong family support or other evidence of financial responsibility. 

Where to find loans for new farmers

Young farmers or people who have never owned a farm before don’t have a long financial history for lenders to consider, which can make securing a loan from traditional lenders difficult. 

The U.S. Department of Agriculture’s Farm Service Agency (FSA) has several lending programs specifically geared towards new farmers. These include 

  • Farm ownership loans (up to $600,000)
  • Farm operating loans (up to $400,000)
  • Down payment programs 

Some states, like Minnesota, offer loans through the state-run Rural Finance Authority (RFA).The FSA and state organizations like RFA partner with financial institutions like Compeer to offer these loans to qualified farmers who are just starting out.

Compeer offers newer farmers the chance to take advantage of our Groundbreakers program. Farmers who are 35 years old or younger and have been farming for less than 10 years can take advantage of ongoing access to funds as well as tools and resources to support their operations. = 

Who is eligible for beginning farmer loans

New farmer loans are typically for people of any age who are new to farming. The FSA defines a new farmer as someone who:

  • Has not owned a farm in at least 10 years
  • Substantially participates in running the operation
  • Does not own a farm larger than 30% of the largest farm in the county (for ownership loan consideration)

 Borrowers will also need to provide additional financial information including three years of tax returns/earnings, balance sheet/financial statement, grain margin manager/projection and life insurance may be needed. 

To be certain you meet the requirements of the loan you’re interested in, talk to a financial professional who understands the ins and outs of running a farm. They’ll help you choose the loan program that best fits your situation. 

How to apply for starter loans

Typically, borrowers apply for loans through the FSA directly or, if the loan is guaranteed, through a partner like Compeer. Along with relevant paperwork like bank statements, a business plan, list of creditors and tax returns (among other items), you’ll also need patience. 

Taking the time to be certain you’re getting the best rates in the right loan program is well worth the wait. If there’s one thing we know about farmers it’s that they know better than to rush something as important as a new beginning. 

Get the right new farmer loan for your needs from Compeer Financial. Contact us now to connect with a financial professional.


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