Delaware Department of Agriculture launches new loan program
DELAWARE – The Delaware Department of Agriculture–in partnership with the Division of Small Business–officially launched the Delaware Agricultural Financing Program, hoping to ease the burden on farmers who often face difficulty when applying for loans.
The program would be providing equipment loans from $25,000 to $250,000, with interest-only payments due in the first year at a competitive 4.25% interest rate.
“The margins in Ag are much lower and there’s a lot risk involved in agriculture. So that makes it more difficult for banks to underwrite some of these loans,” said Jimmy Kroon, Department of Agriculture Administrator.
Kroon said that even though banks hesitate to lend them money, repayment rates among farmers are typically higher than with similar loans in other sectors: “I think that has a lot to do with the fact that when you’re talking about agriculture, it’s a little different from a traditional business where, you know, often the farmer lives on that property. They’re farming the land that they own. It’s not just their work but it’s their lifestyle.”
President of the Sussex County Farm Bureau Steve Breeding said that if not for his personal connections he might not have been able to afford replacing his barn after it burned down recently: “The ability to get capital, to get good funding and lending is imperative…We have a good connection with with our local lender. I’ve known them since high school, so they do me well. I know that I can get funding, but there’s a lot of people that I know out there can’t.”
Breeding said it has become very difficult for new producers to get their operations off the ground. “Somebody that wanted to come right from high school and say, ‘Hey, I’m going to start a farm with nothing,’ I don’t think you could do it anymore.”
According to Kroon, the average age of Delaware farmers is close to the national average, about 58 years old.
Looking ahead, Kroon said it’s important for younger people to have the chance to get into agriculture. “We’re not solving all of those problems. But we are trying to least provide an option for farmers to get equipment to get started,” he said.
The program is also trying to incentivize the expansion of Aquaculture in Delaware. Interest rates for aquaculture projects will be fixed at 3.35%.
The Delaware Agricultural Financing Program currently has $1.5 million in funding that’s available. The DDA says its loans will cover up to 50% of project’s total costs.
