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Registered: ‎05-18-2010
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Pulling a Loan at 17


I am a member over on the FFF boards, but I thought I ought to get adult insights into this subject as well. As a young person, I know that there is the USDA  Youth Loan to 4-H member (which I am) for livestock, crop, and related agricultural products. However, although low interest, its max. is $5,000. My main aim is to buy cattle. I have two options. Buy as many as I can this spring, and add that calf crop to my current funds. Or, save up from summer work (about another $5K) and from the sale of 2010's calf crop and cull cows (close to $10K more). We are looking to ship out the yearling calves this March, and the culls will likely ride along. At that point, it would still be plausible to purchase late spring/early summer calving short term cows. I currently have allocated $5,000 for the purchase of cattle of my current funds. Now, having never had a loan before, my questions are as follows. Is the bank interested in my actual cash worth? My parents have banked there for over 20 years, and now I have been banking there ever since I opened my first savings account. The bank folks know our family well, and my parents have an excellent credit record, but I have none. Also, is it wise to take the $5,000 I can get from the USDA and throw it in with whatever other loans I can get together? Parents and grandparents as loaners are both out. My folks are strapped for cash as it is. Now, in terms of the bank wanting to know their pay back, I think I have a thorough objective. If I can scrape together $15K in my own cash, plus the $5K USDA loan, that is $20K. Short term breds are at anywhere from $760 to $830 a head. There's 25 head at $800. Pasture rent averages $20/head/month. Over 8 months of calving and weaning, that's $4,000. I'll make that month by month at my job. Say I get a bad year and return only 20 calves, and they're light. 550 pounds. At $1.30 they'll return $700 and dang near pay for the cow. On top of that, open cows and the ones in bad shape get sold off to make up the difference. I'm looking, however, to try to get 50 head bought, and that of course doubles my pasture rent beyond my means. However, many of the older cows though can be kept for two calves, which is where the profit comes in. So, here's the layout.

50 cows -         $40,000

Rent -                  $8,000

Feed/drugs -      $1,000 (guesstimate)

My funds -        $15,000

Amount needed - $34,000

USDA Max Loan - $5,000

Bank Loan -           $29,000

Is it even worth trying to get my bank to get me a $30,000 note at 17? I wouldn't be working on loans except the cow market in great and the next couple years offer growth that I may not get the chance to grow like this ever again. Through college the short terms will get sold off and replaced by good quality young cows, thus building the herd. Thoughts? Thanks.

Cade Christensen

MYT Farms

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