Finances

We've updated our Grants at a Glance factsheet here.

Financing/Loans

Highly recommended for start-ups: Engage with the PA Small Business Development Center Agriculture Center of Excellence. Before you approach any lender or apply for any grant you need a business plan including a marketing plan. Consultation us FREE and individualized, and provided

by consultants with ag business experience. Get help with your business plan and finding lenders, market research and industry trends,  improving your credit score prior to approaching banks, marketing, etc.

Lendermatch is a free online tool from SBA. Once you have your business plan you create an account and enter information. (Your SBDC can help.) Once you submit you'll be matched with potential lenders for further conversation.

 

Updates to 2020 PA REAP, Pennsylvania's tax credit program for  farmers/landowners for natural resources protection BMPs. In any watershed with a written TMDL that lists an agriculturally-impairment, certain BMPs are eligible for 90% REAP tax credit reimbursement rate.  (See if you're in an eligible watershed here.) Applications are open and first come/first served; there is no ranking nor veterans' preference for this program.

What information does a commercial bank need when deciding to lend? See a sample Individual Financial Statement form.

PA's Next Generation Farmer Loan Program uses federal tax-exempt financing to reduce a farmer’s interest rate for capital purchases, such as direct purchase of farm and

agricultural machinery and equipment.

Uses

-Agricultural land

-Agricultural improvements

-Depreciable property

Eligibility

-Permanent Pennsylvania resident who are at least 18 at the time of the loan application

-Must meet lender’s credit standards

-Access to adequate working capital, farm equipment, etc.

-Borrower must not have had any prior ownership of a substantial portion of land.

DIsaster Relief (USDA) At a Glance

Farm Credit  works with beginning and experienced operators.  Their Smart Start program for farmers 35 or under,  or with 10 or fewer years of farming, earn credits for loans by completing educational workshops. 

 

FSA (Farm Service Administration) is the federal agency that registers your farmland for access to loans, both operating and ownership

FSA used to be considered 'the loan of last resort' but they prefer to be known as the first place to start. While FSA  requires the borrower to exhaust commercial lending possibilities, establishing a connection with your local county office will open doors to a ton of reliable information on lenders. Most FSA loans, except microloans, have a 3 year education requirement; 1 year is typically waived for eligible military service. On-the-job (OJT) apprenticeships/interships may qualify you for the education requirement. FSA has loan programs for beginning farmers (10 years or less) veterans, women, and minorities.​ Find your nearest FSA office here.

FHLP BOB loans  

Banking On Business (BOB) funding helps eligible small businesses that lack sufficient equity or cash flow meet lending standards. Loans up to $200,000. BOB funds may be used in financing the startup or expansion of a small business, including:

Building purchase 

Land acquisition and construction 

Facility expansion 

Machinery and equipment purchase 

Leasehold improvements

Permanent working capital 

Closing costs

BOB loans are only available from member banks through the FHLBank Pittsburgh. Find them.  Limited funds are available each year; it's suggested to get your request in early in the calendar year.

NRCS  Incentive Payments (formerly called Cost Share)

Funding is available to eligible ag producers for a variety of conservation practices. High tunnels are a popular cost share program. conservation   Learn more about conservation practices NRCS may help with and the certification process for going organic.

 

PA Resource Enhancement and Protection (REAP) Program 

  Farmers, landowner, and businesses earn tax credits for implementing "Best Management Practices" (BMPs) that will enhance farm production and protect natural resources.

  • REAP is a first-come, first-served program – no rankings.  

  • Eligible applicants receive between 50% and 75% of project costs in the form of State tax credits for up to $150,000 per agricultural operation.

  • Applicants can apply for proposed projects and/or completed projects.  Learn more.

Grants

Grants for ag are extremely limited. While some are awarded for a project in full, many require a match in order to show the applicant has buy-in and the resources to maintain the project.   Don't let inexperience keep you from applying--w can help--email us.

Agricultural Marketing Service, a part of USDA, offer grant programs focused  on local and regional food systems, and the specialty crops, dairy and sheep industries. Factsheet

Farmer Veteran Fellowship Fund applications are typically open in during the first quarter of the year.

USDA Rural Development administers a wide variety of funding and technical assistance programs, including the Value Added Producer grants, which are available on a cyclical basis. They generally require a match. Generating new products, creating and expanding marketing opportunities, and increasing producer income are the goals of this program. Staff in your local RD office cannot write your grant application, but meeting with them prior to applying to discuss your potential project should be your first step. VAP grants have closed for 2020 but the applications generally doesn't change much year to year. Review the opportunity and start prepping your proposal for next year now. More info and Federal Register page.

PA DEP's Small Business Advantage Grant is OPEN. SBAG provides 50% matching grants, up to a maximum of $7000 to enable Pennsylvania small businesses to purchase energy efficient or pollution prevention equipment, or adopt waste reduction processes. Or, up ot $5000 for natural resources protection projects like riparian buffer or fencing for rotational grazing. Grant amount will be up to 50% of the total project cost. 

Other lenders focusing on innovation/value added:

Idea Foundry’s Local Food System Innovation Program offers financial assistance to farms, agriculture technology companies, and others which advance the production and distribution of local food through the Local Food Growth Fund. Applicable organizations cover the Greater Pittsburgh Economic Region, made up of 32 counties in Western Pennsylvania, Ohio, West Virginia, and Maryland.  Contact them at info@ideafoundry.org to express your interest and learn more.

The Progress Fund , based in Greensburg, PA,  provides loans from $20,000 to $1 million to start, expand or buy small businesses, and has an interest in

innovative agribusinesses in PA. Their loans can be used to purchase property, restore and rehabilitate buildings, purchase inventory or  equipment, buy the assets of an existing business, and for working capital.  The interest

rate is variable based on the risk of the project.Terms are typically five to fifteen years.  An origination fee and various closing costs are charged. 

Resources:

The Center for Rural Affairs' Strategies for Financing Beginning Farmers provides  user-friendly steps to prepare you to obtain  financial support for new ag ventures. Download it. 

The SBA (Small Business Administration) has a variety of resources for beginning farmers, including consulting, business plan help, and loans.

 

 

 

Before approaching a lender or investor, you must have a business plan. Michigan State University Extension's draft template walks you through the process. Download it here. Small Business Development Centers located at colleges/universities throughout PA also provide a variety of services to veterans.

Veterans and those farming 10 years or less receive preference or rating points for many federal programs.

"Creative financing" might include lease-to-own, apprenticeship/internships on land you will purchase in the future through FSA loans, or public/private ventures.  Send us your story to share. 

Information on this page is for educational purposes and does not imply endorsement.

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