Re: Equipment Loans

Posted by Seth_ia on December 01, 2006 at 21:00:10 from (167.142.10.2):

In Reply to: Equipment Loans posted by Youngfarmhand on November 30, 2006 at 18:23:20:

Since this post has got alittle off topic let me add a little. I don't know where you live nor am I looking to pick a fight. However, some of the advice you have gotten below can sink a beginning farmer in my area in a hurry. The part about livestock is great, they multiply. The advice about not buying machinery, but putting money into land will break any beginning farmer in my area of central iowa. The only people that can buy land in this area are investors and VERY stable farmers. In this area cash rents are mostly reasonable, but land to rent is in very short supply. Land to rent is the biggest barrier to entry. Operatinig capital is really not that hard to find. Do not worry about the cost of the machinery. The important part to worry about is the cost per acre and what a purchase does to your profit margin.

What one has to realize is that the US farm program provides about a break even on corn, soybean, and other program crops. Which makes bankers a worry less about loaning money. Remember this phase,"farming the FSA". The second piece of advice is to learn all you can about federal multiparel crop insurance. What most don't realize is that there is a price support system built into certain parts of that program. They say the devil is in the details, but when it comes to the farm program, "the PROFIT is in the details".

As far as the question on interest rates. I believe the interest on one loan I have is 7%. That loan is for 4 years. Reasonable bankers look at the loan amout and your acerage, and set the number of years accordingly. Previously enjoyed machinery would likely be 5 years or less.

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