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Agricultural Microeconomics Lesson 5: Financing Options

Agricultural Microeconomics Lesson 5: Financing Options.

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Agricultural Microeconomics Lesson 5: Financing Options

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  1. Agricultural MicroeconomicsLesson 5: Financing Options This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

  2. Reoccurring vs. Capital Cost • Reoccurring – An expense (fixed or variable) incurred in running a business. • Capital – An expenditure for the purchase of a piece of equipment or property that has a useful life of more than one year.

  3. Examples of Capital Costs • Fixed Assets • Machinery • Equipment • Land • Buildings • Business Expansion • Additional livestock • Renovation of an existing building • Purchase of an existing business

  4. Financing Options • Cash on hand (Checking) • Savings / Investments • Grant or Incentive • Credit Cards • Mortgage (Buildings and Land) • Lease (Equipment and Machinery) • Loan

  5. Types of Lenders • Friends or Relatives • Traditional Lending Institutions: Banks and Credit Unions • Community Development Financial Institutions (CDFIs) • Government Loan Programs • Small Business Administration • USDA Farm Service Agency’s Farm Loan Programs

  6. Tips for Young Farmers • Sweat the small stuff (keep detailed records) • Know your costs • Evaluate your purchase (do a cost/benefit analysis) • Develop a business plan

  7. Types of Questions • Name, Address, Social Security Number, Birthdate • Amount of Loan Request • Brief Description of Project • Income and Expenses (Actual and Predicted) • Assets and Debts • Business Plan

  8. Applying For a Loan

  9. Next Class: Cost / Benefit Analysis This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

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