The Beginning Farmer Loan Program helps steer farmers to low-interest loans. The loans are available through a bond program administered by the Missouri Agricultural and Small Business Development Authority.

Farming is tough enough, even if you're a seasoned veteran. For young farmers trying to get a start, challenges can be almost overwhelming. But aspiring farmers with a little experience and a lot of determination can find several state and federal programs aimed at helping beginners acquire property at lower interest rates. One of these is the Beginning Farmer Loan Program administered by the Missouri Agricultural and Small Business Development Authority.

"We have authority to issue 'Aggie bonds,' similar to industrial revenue bonds," said Tony Stafford, manager of the program. "A commercial lender agrees to make the loan, and we issue bonds to cover the amount of the loan. These bonds are exempt from federal and state taxes, which lets the lender loan money at lower interest."

No money changes hands between the state authority and the lender. The bonds allow lenders to forgo state and federal taxes on interest income, some of which is passed on to the borrower in the form of lower interest rates.

"I couldn't have made this place cash flow with a conventional loan," said Clayton Burkhalter, who bought 117 acres in Pettis County, Mo., in 1998 with a Beginning Farmer Loan. "The land adjoins land we were already farming, but I would not have bought it without the program."

Clayton farms with his twin brother, Clinton, and their father, Marvin. He bought the 117 acres in his name and added it to some 3,000 acres of owned and rented land the partners farm. Initially, 120 acres came up for sale. Burkhalter was interested and talked to the real estate agent handling the sale.

"I had heard about the Beginning Farmer Loan Program, and Clayton asked the realtor about it," said Marvin.

Clayton and the real estate agent huddled with the Burkhalters' banker, who outlined the details of the program. The land contained a dwelling, and Clayton knew a couple who was interested in buying the house.

"I sold off three acres and the house, which cheapened the property somewhat," said Clayton. "At the time, the bank was making farm real estate loans at 9.25 percent interest. I got the loan for 5.5 percent." The 3.75 percent lower interest will save Burkhalter nearly $40,000.

"This is pretty typical of the loans made under the program," said Stafford. "About 85 to 90 percent of the loans are made to young people who buy some adjacent land and farm with their parents. But this is not geared strictly to young farmers; a beginning farmer of any age can qualify as long as his or her asset net worth does not exceed $200,000, and he or she does not own land equal to more than 30 percent of the median-sized farm in the county.

"There has been some version of this program around for the past 15 years or so," Stafford added. "But in the mid-90s we got permanent funding for this program."

The Beginning Farmer Loan Program makes up only a small part of Missouri's entire bonding program.

"But we average making loans worth about $3 million each year," said Stafford. "So far in calendar year 2000, we have made 14 loans under the program."

The Beginning Farmer Loan Program often can be used in conjunction with other reduced-interest programs. Missouri's "First-Linked" deposit funds, administered by the state treasurer, make state money available to lenders at reduced rates. This lower interest rate usually is passed on to borrowers, who can combine "First-Linked" loans with Beginning Farmer loans. For more information, contact the State Treasurer at P.O. Box 210, Jefferson City, MO 65102. Telephone: (800) 662-8257.

USDA Farm Service Agencies can make low-interest down-payment loans, too. Eligible borrowers must come up with a cash down payment equal to 10 percent of the purchase price. Then FSA can loan up to 30 percent of the appraised value of the property. These loans can be made in tandem with Beginning Farmer Loans for an interest rate less than conventional lending rates. Contact your local FSA office for more details.