Where Can the Money Be Got?
Investment in a farm involves (1) the land, farmhouse, and other buildings; (2) machinery and equipment; and (3) livestock-and work animals.
Few farmers have enough money at the outset to buy a farm outright. Most of them have to get long-term loans to finance the bulk of the investment. Such loans can be obtained from farm-mortgage companies, life-insurance companies, federal land banks which are part of the Farm Credit Administration, and from the Farm Security Administration.
Any man who has served ninety days or more in the armed forces since September 16, 1940, and been discharged under conditions other than dishonorable or who is released because of a disability incurred in line of duty is eligible for the loan benefits of the GI Bill of Rights. Under the provisions of this law he may be entitled to a guaranty by the Veterans Administration of loans to be used to buy or improve land, buildings, livestock, equipment, or machinery for farming operations.
The Veterans Administration does not lend the money itself; it guarantees 50 per cent of such loans—up to a maximum guaranty of $2,000. The interest rate may not exceed 4 per cent and the loan itself must be payable in not more than twenty years. Loans are approved for guaranty by the Veterans Administration if it finds that “the ability and experience of the veteran, and the nature of the proposed farming operations to be conducted by him are such that there is a reasonable likelihood that such operations will be successful,” and furthermore that the purchase price “does not exceed the reasonable normal value.” Interest for the first year will be paid by the Veterans Administration.
A veteran who goes first to such a federal agency as the Farm Credit Administration or the Farm Security Administration for financial help in locating on a farm has two strings to his bow. After he has got one loan from such an agency, or one insured by it, he can also get a second loan guaranteed by the Veterans Administration under the GI Bill. The full amount, up to $2,000, of this secondary loan may be guaranteed. The secondary loan, however, may not exceed 20 per cent of the cost or purchase price.
In certain areas loans up to $12,000 are also available from the Farm Security Administration to tenants, sharecroppers, and farm laborers to buy farms of their own. Under the GI Bill these loans are available to qualified veterans even though they are not tenant farmers. They are repayable over a period of forty years, interest figured at 3 per cent. Farm Security Administration loans may also be obtained for five years at 5 per cent for operating purposes-to buy equipment and stock, repair or improve farmhouses and other buildings, or buy fences, soil-building materials, and other necessary items.