Table of
Contents

• Introduction
• Assessing & Planning
  • Getting Started
    • Getting Started
    • Hands-On Experience
    • Setting Up Shop
    • Land Acquisition
  • Farm Description
  • Business Plan/Whole Farm Planning
  • Infrastructure
  • Equipment
• Production
  • Production Models & Methods
    • Production Models & Methods
    • Field Production
    • Hoop House Production
    • Harvest, Handling, & Packing
  • Sustainable Practices
    • Sustainable Practices
    • Soils
    • Cover Crops
    • Fertilizing
    • Rotations
    • Irrigation
    • Biodiversity
  • Crop Yields
• Management & Marketing
  • Farm Management/
    Operations
  • Marketing Models
    • Marketing Models
    • CSA
    • Farmers' Market
• The Farm Business
  • Human Resources
  • Finances
    • Finances
    • Start-Up Capital and Loans
    • Farm Income Overview
    • Off-Farm Income
    • Expenses
  • Business Structure
  • Risk Management
  • Professional Development
• Conclusion

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The Farm Business

Finances

Start-up Capital and Loans

Adam and Laura financed the start-up of Loon Organics in 2005 with personal savings. They were able to pay themselves back within the first few years. Their sources of capital are summarized in Table 7. Start-up funds were used for capital purchases, seeds, and other supplies in 2005-2006. The capital in 2009 was used for start-up expenses for the first season at the new farm, before CSA payments started coming in.

Table 7. Sources of capital, 2005-2009

Year	Amount	Source	Payback Period
2005	$5,750	Personal savings	2005
2006	$6,000	Personal savings	2006-2007
2007	$0	n/a	n/a
2008	$250,000	FSA loan	Ongoing (40-year mortgage)
2009	$6,000	Personal savings	2009 (half), 2010 (half)

Laura and Adam purchased their farm for $265,000 in 2008. They financed the purchase through a USDA FSA loan program targeted to beginning farmers and ranchers who have difficulty obtaining a loan from traditional agricultural lenders. Applicants need to have at least 3 years of demonstrated farm experience. Although Laura and Adam found the application process lengthy and time-intensive, they felt the effort was extremely worthwhile because it was one of the major factors that made the farm affordable to them. They used tax returns and a projected 3-year cash flow that their FBM instructor helped them to create, along with a current balance sheet, in order to document their production history. The FSA loan had a low fixed interest rate, long amortization, and no closing costs. Once Laura and Adam are in a more secure financial position, the loan will be refinanced with a shorter amortization through a commercial agricultural lender.

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