When it comes to financing farm and ranch improvements like fencing, soil and water quality improvement projects, equipment and farmland preservation some producers are thinking outside the box. Instead of heading to the bank for a loan, they’re reaching out to their customers and communities to put together project financing. To help you explore that option, here’s a great resource that shows how community supported farming has worked for some, shares the pros and cons describes how different funding avenues can be used legally and effectively.
The “Guide To Financing the Community Supported Farm” comes to us from SARE (Sustainable Agriculture Research and Education), University of Vermont Extension and a team of six farmers, five attorneys, five agricultural service providers, and two financial experts. The 60-page guide describes 8 different innovative funding mechanisms that farmers have used, the advantages and the challenges of each, and includes case studies from farms using different funding options. While the purpose of the guide is to make it possible for farmers to do much of the leg work in crafting their creative financing agreements and to avoid accounting and legal costs, that doesn’t mean you should go it alone. The guide points out those times when getting legal counsel and tax advice is particularly important.
The Eight Strategies Covered by the Guide include:
• Owner financed sales and land contract
• Partnering with farmland investors
• Share leases
• The creative use of promissory notes
• Revenue Based Financing
• Equity Financing
• Multi-year CSAs
You can download the entire guide for free right here. Or you can go to the UVM New Farmer Project website to download just the sections you’re interested in. You can also click here to read the final report about how the guide was created and what the team learned along the way.
If you’ve tried alternative funding methods for your projects, your fellow On Pasture readers would love to hear about what you liked and didn’t like about the results. Share in the comments below!