This bill creates a pilot program to give or guarantee development loans to beginning farmers and ranchers. "Development expenditures" are defined as capital investments that help a farm or ranch for more than one year, such as buying initial assets, improving soil, establishing breeding stock or perennials, small equipment, business systems, branding, payroll, or other business practices. The Secretary must set up the pilot within two years and make loans that only cover those development expenses.
If you are a beginning farmer or rancher who qualifies, the program would let you borrow money specifically for multi-year capital needs instead of using annual operating loans. Loans can be used for things like equipment, soil improvement, bookkeeping systems, or building customer relationships. The program also requires borrower training on bookkeeping, taxes, credit, cash flow, and risk management provided through partner organizations.
Individual development loans may be up to $100,000. Repayment terms must be at least 3 years and at most 10 years. Interest rates are set by the Secretary and must be between 0% and 3%. Borrowers must make annual interest payments, and principal repayment must be flexible but include at least 1% of the remaining balance due each year. Collateral requirements may be up to 100 percent loan-to-value but lenders may reduce that based on borrower experience. The bill does not include information on total program funding, number of loans to be made, or expected federal budget costs. No publicly available information.
The bill’s findings say beginning farmers and ranchers often need multi-year investments and that current programs frequently treat those investments as annual operating loans. Proponents argue that a dedicated development loan option and training would help beginning farmers make appropriate start-up investments, build working capital, and lower difficulties in meeting loan terms.
No publicly available information.