Presentation Title This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported LicenseCreative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License “Cattle at Sunset” by Andrew S. Gray Photography, Creative Commons CC BY-NC-SA Agricultural Microeconomics Lesson 5: Financing Options This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported LicenseCreative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Reoccurring vs. Capital Cost Reoccurring – An expense (fixed or variable) incurred in running a business. Capital – An expenditure for the purchase of a piece of equipment or property that has a useful life of more than one year.

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Examples of Capital Costs Fixed Assets – Machinery – Equipment – Land – Buildings Business Expansion – Additional livestock – Renovation of an existing building – Purchase of an existing business

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Financing Options Cash on hand (Checking) Savings / Investments Grant or Incentive Credit Cards Mortgage (Buildings and Land) Lease (Equipment and Machinery) Loan

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Types of Lenders Friends or Relatives Traditional Lending Institutions: Banks and Credit Unions Community Development Financial Institutions (CDFIs) Government Loan Programs – Small Business Administration – USDA Farm Service Agency’s Farm Loan Programs

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Tips for Young Farmers Sweat the small stuff (keep detailed records) Know your costs Evaluate your purchase (do a cost/benefit analysis) Develop a business plan

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Types of Questions Name, Address, Social Security Number, Birthdate Amount of Loan Request Brief Description of Project Income and Expenses (Actual and Predicted) Assets and Debts Business Plan

Photos by: Nancy Ranney, Ranney Ranch. Used with permission Applying For a Loan

Presentation Title This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported LicenseCreative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License “Cattle at Sunset” by Andrew S. Gray Photography, Creative Commons CC BY-NC-SA Next Class: Cost / Benefit Analysis This course developed by The Environmental Finance Center at UNC Chapel Hill for The North Carolina School of Science and Math and NCDPI is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported LicenseCreative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License