CREDIT FOR FARMERS 



In the ordinary course of events it is estimated that about 8 out of 10 

 farmers in Massachusetts use credit at some time during the year. The sources 

 they use may be quite varied but credit is extended whenever goods or services 

 are acquired without full payment at the same time. 



There are only four means of obtaining the capital needed in farming and 

 they are: to inherit it, to get it as a gift, to save it from earnings or 

 to borrow it. Very often the needed amounts are obtained by a combination of 

 two or more of these means. 



For many farmers it becomes a necessity to borrow in order to establish a 

 large enough capital structure to produce farm earnings which will provide a 

 desired standard of living. Borrowing capital, however, has its risks and 

 hazards . 



A sound and profitable farm and home management program requires a plan 

 for the most efficient and profitable use of capital whether borrowed or not. 

 Putting such a plan into operation requires making arrangements to get the needed 

 capital on a satisfactory basis. 



For the fanner who must seek capital through borrowing, three important 

 steps are involved: 



1. He must consider and evaluate the benefits and risks which are 

 concerned with borrowing. 



2. He must decide how to effectively organize and present his case 

 to a prospective lender. 



3. He must decide what specific agreements should be included in the 

 loan contract after it has been determined that a sound basis for 

 credit exists. 



Since modern fatnning calls for substantial amounts of capital to be most 

 profitable, many farm families must take the risks of borrowing. They should be 

 calculated risks -- potential benefits balanced against potential risks. 



Here are 10 rules to follow: 



1. Use loans only for things that will increase income ~ needed 

 machinery, livestock, feed, seed fertilizer, etc., that will earn 

 income — they are productive investments, 



2. Limit debts to amount needed to operate efficiently . Select your 

 loan purpose to bring the largest dollar return in the shortest 

 time. 



3. Study and estimate future price trends . Discount future prices and 

 give full value to costs. 



4. Keep debts in line with your net worth -- what you own minus what 



