Financial training for socially disadvantaged producers
Many socially disadvantaged producers do not understand the importance of business structure, record keeping and the impact of credit when it comes to their operations. This adversely affects their potential for loans and qualifying for lower interest rates, heightening the potential of greater loss on the farm.
University of Arkansas Cooperative Extension Service provided in-depth training and one-on-one assistance to 127 socially disadvantaged producers from October 2021 to September 2022. They learned about different business structures and how each worked. Business management basics and tax education were also part of the training. Practice exercises were completed on farming as sole proprietors versus other business structures, filing taxes and learning how to deal with adverse outcomes including land loss with generational impact.
As a result of the trainings, these producers were able to increase their credit history consistency and their credit ratings by an average of 30 points. This allowed them to gain over $450,000 in farm loan assistance. Many also changed their business structure from sole proprietor to limited liability companies or trusts, which helped protect them from the potential loss of private property and/or monetary loss of items not associated with the farming business. Additionally, due to improved record keeping, the producers were able to receive over $400,000 from USDA disaster programs.
Link to full statement on website: http://landgrantimpacts.tamu.edu/impacts/show/6044