USDA FSA Youth Loan

Quick Facts

• Maximum loan: $5,000 for an individual youth borrower. Funds can cover livestock, feed, seed, equipment, or marketing costs tied to an income-producing project.
• Interest rate: Fixed at FSA’s direct operating loan rate, typically well below commercial youth financing options.
• Repayment term: Up to 7 years, though many projects operate on annual or seasonal schedules.
• Supervision requirement: Projects must be sponsored by 4-H, FFA, a tribal youth organization, or an agricultural educator who provides guidance throughout the loan term.
• Security: Collateral usually consists of the purchased livestock or equipment and may require a parent or guardian to pledge additional support.

Program Overview

FSA Youth Loans empower students to learn farm business management while building credit. Borrowers design a modest agricultural enterprise—such as raising show cattle, managing a CSA garden, or operating a beekeeping venture—and repay the loan from project income. The program emphasizes education, requiring written plans approved by a project advisor and parental consent. Successful repayment can pave the way for future FSA Microloans or direct loans after age 21.

Eligibility Requirements

1. Age range: Applicants must be between 10 and 20 years old at the time of loan closing.
2. Program participation: Must be enrolled in an approved youth organization (4-H, FFA, Tribal youth program, or similar) that provides project supervision.
3. Credit elsewhere test: Youth must demonstrate they cannot secure credit from other sources at reasonable terms. A simple denial letter from a bank or statement from a parent may suffice.
4. Project feasibility: Submit a written business plan outlining costs, revenue, marketing strategy, and repayment timeline.
5. Parental consent: Parent or legal guardian must endorse the loan documents and agree to be involved in oversight.
6. Collateral and insurance: Provide security for the loan and obtain insurance if required for livestock projects.

Application Process

1. Develop the project plan: Work with your advisor to detail budgets, production schedules, and marketing outlets.
2. Meet with the FSA loan officer: Bring your advisor and parent to the local Service Center to review eligibility and forms.
3. Complete application forms: Submit FSA-2001, FSA-2302 (Description of Farm Training and Experience), balance sheet, and cash flow worksheet tailored for youth projects.
4. Provide supporting documents: Include advisor letters, lease agreements for land or facilities, livestock purchase contracts, and proof of participation in the sponsoring program.
5. Review credit and collateral: FSA assesses the project’s ability to generate revenue. Parents may need to co-sign security agreements.
6. Closing and management: After approval, funds are disbursed and monitored through supervised bank accounts. Provide periodic progress reports to the loan officer and advisor.

Tips and Tricks for Young Borrowers

• Use extension templates: Many land-grant universities publish youth project budgets. Customize these templates to show realistic yields and expenses.
• Schedule regular check-ins: Set monthly meetings with your advisor and parents to track expenses and income, keeping the project on schedule.
• Open a dedicated bank account: Deposit all project revenue into a separate account to simplify recordkeeping and demonstrate accountability to FSA.
• Plan marketing early: Secure buyers for livestock, CSA shares, or honey contracts before borrowing. Include letters of intent when possible.
• Document skill development: Maintain a project journal with photos, financial records, and lessons learned. This strengthens renewal applications and scholarship essays.

Strategies to Ensure Repayment

• Create contingency plans: Outline what you will do if prices drop or animals get sick. Set aside a portion of revenue in reserve.
• Leverage community mentors: Local farmers, FFA alumni, or cooperative extension agents can provide technical troubleshooting.
• Track inventory diligently: Record feed usage, animal weights, or crop harvest volumes weekly. Accurate data helps you adjust feeding or irrigation to stay on budget.
• Consider value-added sales: Explore selling branded cuts, floral bouquets, or farm tours to boost margins and repay faster.

Frequently Asked Questions

Can siblings each get a youth loan? Yes, as long as each applicant has a distinct project and can manage it independently. Shared equipment is allowed with proper documentation.

What happens at age 21? You must repay or refinance the youth loan into an appropriate FSA product before your 21st birthday. Many graduates roll into a Microloan to expand their business.

Do youth loans build credit? Yes. Timely repayment is reported within USDA systems and can help future lenders assess your reliability. Ask FSA for a payment history letter when applying for college or other financing.

Additional Resources

• FSA Youth Loan Program Guide
• National FFA Supervised Agricultural Experience resources
• 4-H Entrepreneur curriculum