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The Farm Business


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




Payback Period



Personal savings




Personal savings








FSA loan

Ongoing (40-year mortgage)



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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