A business plan, the “where do we want to go and where are
we going to go,” is the essential beginning of any farm business according to
Henry Grinbaum, vice president of Farm Credit East, who spoke recently at the Urban
Ag Workshop at the Cook Campus of Rutgers University.

“Urban agriculture is the future,” Grinbaum said. “We used
to talk about agriculture as a lifestyle. It’s a business. And it’s easier
farming with money than for money.”

Farm Credit East has been lending farmers money since 1917,
he noted.

The first step is a business plan, Grinbaum said. The plan
must contain positive projections but also note the obstacles that can stand in
a farmer’s way. Good financial records including year-to-date financials are
essential.

“I don’t care what you gross, it’s the net that counts,”
Grinbaum said.

“You’ve got to have skin in the game,” he told the farmers
in the audience. “You’ve got to take the risk.”

He said today people tend to want to borrow all they think
they need, but they must have something to invest. Collateral is essential and
all budgeting must have room for adversity, he added.

Borrowing from Farm Credit is better than trying to borrow
from community banks, Grinbaum said, because Farm Credit can value assets banks
don’t understand. He notes in 37 years FCE has only had to foreclose five
times.

Money is also available from the federal government.

The Farm Service Administration is the arm of the USDA that
provides both real estate and operating loans to farmers, Austin Baird
explained. FSA can loan up to $300,000 to purchase land, construct buildings
and for other capital improvements. The farmer must first be denied a loan by a
community bank, which Baird said isn’t hard.

“Just ask for $300,000 for a hydroponic operation and see how
fast they say no,” he said.

Operational loans can be for tangible goods, like equipment,
for up to seven years, or for seed or similar products for up to one year. The
FSA also makes loans for emergencies.

Microloans of up to $50,000 are not restricted to full-time
farmers, Baird said. These can be very important to urban farming. The
application must include a program plan, gross income (including non-farm
income) and operating costs. Loans for storage buildings and greenhouses can be
based on the life of the building.

Youth loans from the FSA can help 4-H’ers between 10 and 20
years old. The loans can help the kids buy a calf or a couple of sheep.

Gabi Grunstein of FSA said loans are available for farm
storage, grain/hay storage, box trucks and refrigerator trucks. These loans can
be up to $500,000 for a duration of three to 12 years. FSA also provides
technical assistance in such things as food safety and handling. Disaster
relief may be available for uninsured crops like vegetables.