4-H/FFA Loan Program

1. 4-H/FFA Loan Program

2. What is a loan? • A sum of borrowed money (principal) • Repaid at a later date, with interest What is interest? Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal balance of the loan Lend: give temporarily; let have for a limited time; "I will lend you my car"; "loan me some money"

3. Loan program to assist you with the financing of your 4-H or FFA projects. What will I learn? How to manage money Responsibility of your project Loan process What is the 4-H/FFA loan program?

4. Why would I use it? • Assist you with the starting costs of your projects • Teach financial responsibility • Finance your goals • Help mom and dad out

5. Any 4-H/FFA project that is considered income producing Market steer, hog, sheep Flock of sheep Lawn mowing business Poultry Project Horticulture What type of loans can you get? Examples:

6. Loan Conditions • Must be an active 4-H or FFA member • Project must be income producing • Loan for initial application up to $1500 (Following repayment from initial loan, future requests will be considered up to $5000.) • No fees • Co-signed by parents or guardian • Project leader to sign

7. How does it work? • Talk with your leader on the right project for you • Talk to your parents • Decide on the project conditions • Fill out the 4-H/FFA loan application • Make an appointment to come see me • Start your project

8. Erica wants to buy a small flock of sheep She can do a 4-H project on them Mom and Dad can not afford the high cost all at once for the sheep Farmland at home available Dad used to raise sheep Loan Example:

9. How much will it cost? 5 Ewes @ $175 each = $875 (all expected to lamb any day now) Feed projection 150 Medicine/Vet 100 Supplies/other 100 Total projected costs1225

10. How to structure your payments • When will I get paid? • How much money to set aside? • Expenses • Projected loss Sell lambs each September: Make principal and interest payment October 1

11. Payment Schedule • Set loan up for two years – annual payment • In September you will get a bill Principal $612.50 Interest (projected) 33.69 Total payment each year$646.19

12. Let’s project income: Year 1: 7 lambs @ $100 $700 Sell 1 Ewe @ $100 100 Total projected income $800 Year 2: 6 lambs @ $100 600 Total projected income $600 Total income from two years $1400

13. How to make the payment Year 1: Sale ticket $800.00 FC payment - 646.19 Net income 153.81 • Year 2: • Sale ticket $600.00 • FC payment - 629.69 • Net income (loss)29.69

14. Loan Request • Market Steer $ 1200 (+ $22 interest) • Feed 850 (not included • Supplies 150 in loan) $2222 Choice Steer 1295lbs at $1.85 = $2395.75 Sold in May $1200 Principal Interest $22 June 1 Payment $1222 • $2395.75-$2222 = $173.75

15. Managing money • Make sure you save money in case of an emergency (medicine, vet bill, extra feed, death) • After you pay all bills…will need money to operate on • Put in checking/savings account Remember: Always save for a rainy day