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Thread: Loans

  1. #1
    Join Date
    Feb 2013
    Location
    Lehi, Utah, USA
    Posts
    24

    Default Loans

    I'm thinking about applying for a USDA FSA Youth Agricultural Loan, It only has about a 1% interest on it. I'm 16 years old and I live in central Utah. I'm wanting to go from my 2 current hives to about 20-25 hives. My real question is: do you think I could pay back the hives within 2 years? And what would be the best markets to make money in; like queens, honey, pollination? All input is welcomed

  2. #2
    Join Date
    Dec 2007
    Location
    Ludington, Michigan
    Posts
    611

    Default Re: Loans

    I think your going to have to answer your own question. Are you planning on buying established colonies, nucs or packages. Establish will make a crop the first year. The other 2 options maybe. What is your average harvest per colony in your area? Where do you plan on selling? If you plan on pollination do you have clients in mind and what is the average fee for pollination in your area? How are you going to move colonies into pollination? Do you plan on forklifts, trucks and honey house w/ equipment. How much do you plan on barrowing? One more thing if you plan on making any kind of profit with 25 colonies and a loan it just aint going to happen

  3. #3
    Join Date
    Jul 2011
    Location
    Denver, Colorado, U.S.A.
    Posts
    737

    Default Re: Loans

    I would be very leery about taking on debt for bees at age 16. Especially for something where profit is as unpredictable as it is in beekeeping.

    I would instead suggest growing your apiary on your own by building equipment and making splits. In a couple of years you can have a very large apiary and be debt free.

    JMHO
    --shinbone
    (3rd year, 14 hives, Zone 5b, 5400 ft, 15.8" annual rainfall)

  4. #4
    Join Date
    Feb 2013
    Location
    Lehi, Utah, USA
    Posts
    24

    Default Re: Loans

    I plan on using a flatbed trailer for transportation, I'm renting honey processing equipment, and I'm loading and unloading by hand, which is not fun but cheap. Personally I'm hoping to break even and maybe make a little profit after two years. I got 45 pounds out of my new hive last year, but we all know not to count on one year being like the next...

  5. #5
    Join Date
    Jun 2012
    Location
    Citrus County, Florida, United States
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    258

    Default Re: Loans

    @pioneerboy, just my .02

    In small business, the early stages of most endeavors with even higher controls (agriculture is one of the most variable business operations out there) opting for aggressive ORGANIC GROWTH over debt fueled growth is the better way to go. Add to this the fact that you are asking this question is probably a good indication that you REALLY know its answer, and have to become more honest with yourself. Once you start getting into lending you need to be good at your craft, BUT EVEN BETTER AT BUSINESS.

    Have you made honest goals every beekeeping season and obtained them thus establishing a track record of execution? What is your cost right now of first year hive establishment? What is your yield per hive average (is it honey, pounds of bees, splits, nucs or queens?) and over how long? Indeed there are many options/ways to make money in beekeeping, but I think there are also way too many Jack-of-All-Trades & Master-of-None types out there. Chasing multiple revenue streams in the early stages usually results a fragmented business with lots of inefficiencies that are costly. Better to pick a viable market niche, master it and THEN move on to others. This will also help you figure out more accurately EXACTLY how much money should be borrowed.

    Loans (no matter the terms) always up the stakes and add unnecessary performance pressures. Upping performance pressure at a business' infancy is a recipe for failure. Being young you have time on your side and that equals money. Taking a longer term view and developing a business plan will do you well.

    Lastly, today there are more creative options for financing other than things such as the USDA loan program and credit cards. Often these creative financing options carry less punitive risk than the former mentioned--Kickstarter, for example. Friends and family also shouldn't be overlooked. When you're young you have youth and vigor on your side. I'd suggest devising the BUSINESS PLAN FIRST and testing it to see if you have the skills of execution necessary for success.

    Good luck and remember to FIRST enjoy your bees, then worry about what they can do for you.
    Last edited by Nature Coast beek; 02-27-2014 at 07:54 AM. Reason: the usual--grammar & spelling

  6. #6
    Join Date
    Jul 2012
    Location
    lafargeville ny usa
    Posts
    504

    Default Re: Loans

    short term [under 5 or 7 years] loans for agriculture require carefull planning. 1 or 2 years is for evening out cash flow for unexpected expenses in an established business. to think of expanding a lot with a 2 year loan is asking for trouble. it might be different if you had 100 hives and had a good reason to go to 135 such as to fulfill a pollination contract, it is not just the amount of money but the proportion of the cash flow... what if you got a dearth or you had bad winterkill? do you have established income enough to pay it off without the bees? established income does not mean maybe I can get a job... the suggestion for slow steady self financed growth is the best plan.
    Last edited by mathesonequip; 02-27-2014 at 09:23 AM.

  7. #7
    Join Date
    Nov 2011
    Location
    Rader, Greene County, Tennessee, USA
    Posts
    5,676

    Default Re: Loans

    Note that the USDA FSA Youth Agricultural Loan under discussion does require a business plan. More here:

    http://www.fsa.usda.gov/Internet/FSA_File/loanyouth.pdf
    You may be interested to read that the maximum loan amount is $5000.
    -- Victor Hugo -- "Common sense is in spite of, not the result of, education.

  8. #8
    Join Date
    Apr 2013
    Location
    Madisonville,TN
    Posts
    184

    Default Re: Loans

    Off the loan topic a bit, I think it is great that you have this goal at 16. As a professional educator, I see kids everyday that have absolutely no direction, no goals, and no aspirations, no nothing. Just thinking the way you are at 16, I have no doubt you can make a business out of beekeeping, as long as you have a love for the bees. That being said, I would stay away from loans of any kind. You are starting out early enough, that if you build slowly you will not need them. I also would suggest some type of business classes when you graduate, and try and take some in your high school now, if offered. For now, use free resources such as this forum for advice as you build your business and learn about bees.
    16 y, 30 hives ULBN, treat when needed.

  9. #9
    Join Date
    Feb 2012
    Location
    Rome, GA
    Posts
    144

    Default Re: Loans

    I am currently using our small bee operation as a business teaching tool for my kids. When my kids realized we weren't gonna keep any of the money we made this year and use it to buy more equipment, the look on their faces was priceless. But you cant learn lessons like this in school.
    I also understand that you want to get from point A to point B as quickly as possible.
    Especially in this economy, Stay away from Debt. It may not be the plan you want to hear, but I would recommend you build up steadily and reinvesting your profits.

    Good Luck!

    DD
    Let's Eat Grandmaw ........... Let's Eat, Grandmaw.......Grammar Saves Lives

  10. #10
    Join Date
    Jan 2011
    Location
    Great Falls Montana
    Posts
    3,831

    Default Re: Loans

    That is almost free money and it is hard not to take advantage of it. I expanded on a wild flyer like you are planning but I had a full time job to back be up and help pay the loan if it didn't rain! If I was going to outfit a twentyfive hives right now it would cost $2500 for 100 deeps, My homemade covers and bottom board designed for your beekeeping style another $150. Bees are going to cost you $2500 minimum at this late date. I would plan on another $1000 in pollen patties and sugar to get them going. Now if you use your paper route or pump gas to pay for other incidentals like emergency queens needed that is $6150 to start out and apparently dads buildings. 45 pounds 25 colonies is only 1125 pounds of honey. Can you sell that honey for an average $3.50 a pound and sell it all? I threw in 50 cents a pound for jars and equipment rental.

    If you think you can write and cash that check, you will never learn any younger and certainly have my permission!

    What happens if it doesn't rain? If you are relying on irrigated bee pasture what if Obama decides your land gets no water?

    What happens if you get poor stock. As a new hobbyist, a shyster will seek you out and give you trash if at all possible! I paid for a dozen single hives that were supposed to be delivered May 1st and got three frame nucs in nasty trash 10 frame equipment in June, D.W.Lawler thank you very much!, when I was starting. How are you going to make sure that doesn't happen to you.

    If you have a farmer father who has your back, I would go for it. If your widowed mother is going to be cosigning for you. Expand off your profits and day job. Find a commercial guy and work for him this summer.

  11. #11
    Join Date
    Feb 2013
    Location
    Lehi, Utah, USA
    Posts
    24

    Default Re: Loans

    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.

  12. #12
    Join Date
    Feb 2012
    Location
    Colorado Springs, CO United States
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    357

    Default Re: Loans

    Pioneerboy, to answer your real questions, 1. Probably not, to many variables and to much new equipment to buy. 2. The best markets are the ones that have the largest demand that you can supply, and are great at doing/supplying.
    I would reread Matt903 post over and over. Wish you were closer, so I could help you out on some free bees, equipment, and experience. This may be another way to go, find a beekeeper in your area who can help you along the way, as well as the other good comments suggested above.

  13. #13
    Join Date
    Feb 2012
    Location
    Colorado Springs, CO United States
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    357

    Default Re: Loans

    Quote Originally Posted by pioneerboy View Post
    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.
    Ahh, just read you latest, looks like our input had a leaning

  14. #14
    Join Date
    May 2009
    Location
    Bloomington In
    Posts
    790

    Default Re: Loans

    Quote Originally Posted by pioneerboy View Post
    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.
    Advice that a 106 year old lady gave me once. Pay as you go and go real slow. Look like you are finding a way to do it with out the loan.

  15. #15
    Join Date
    Dec 2013
    Location
    Arras, British Columbia, Canada
    Posts
    147

    Default Re: Loans

    I took a similar loan when I was a youth here in Canada. I would say go for it. You have few expenses, and if nothing else you will learn a lot. At the scale you are talking there is very little to lose. It might educate you more on finances than it does on beekeeping. Pay no mind to the naysayers here, you are young and the time to learn about credit and business acumen is now. Working for someone else is good for the soul but really teaches you nothing about business. I wish you good luck and hope you do chose to go for it.

    I think I borrowed $3000 dollars 25 years ago, bought hives and pollinated. It was a local chamber of commerce sponsored program. I did two pollinations which combined left me with ~$1500 (at the time) sold maybe ~$400-500 in honey. This left me with a deficit for the year. I worked a few months and made up the difference. So the following year I had 30 hives paid for. Go and do it.

  16. #16
    Join Date
    Jul 2012
    Location
    Kirksville, Missouri USA
    Posts
    94

    Default Re: Loans

    Quote Originally Posted by pioneerboy View Post
    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.
    Good plan for you.

    The borrower is slave to the lender. Proverbs

  17. #17
    Join Date
    Jun 2012
    Location
    Citrus County, Florida, United States
    Posts
    258

    Default Re: Loans

    Quote Originally Posted by pioneerboy View Post
    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.
    Sounds like a good opportunity. Also, don't forget any knowledge/guidance that commercial beekeeper passes on to you is bonus. Good luck to you and it sounds like you're off and running!

  18. #18
    Join Date
    Jan 2005
    Location
    FRASER VALLEY, BRITISH COLUMBIA
    Posts
    1,303

    Default Re: Loans

    I'm with Jodie on this one. It is only 3 zeroes after the 5. The exercise of doing it would be of great benefit. At 1% interest. How can you go wrong? With honey in the drum at $2 plus a pound bees have become a nice commodity that is easily turned into cash if you want to get out in a year or 2.

    Jean-Marc

  19. #19
    Join Date
    May 2012
    Location
    DFW area, TX, USA
    Posts
    1,014

    Default Re: Loans

    Quote Originally Posted by pioneerboy View Post
    I'm not going to take the loan... I found a job building boxes and frames for a commercial beekeeper, and Hes going to pay me with packages of bees.

    I'll build swarm traps and split my hives. For more bees also.
    Thanks for the input.
    Shows good judgement. This sounds like the best road to me! Good luck!
    LeeB
    I try to learn from my mistakes, and from yours when you give me a heads up :)

  20. #20
    Join Date
    Feb 2010
    Location
    New York City, NY
    Posts
    4,317

    Default Re: Loans

    Why would you want to pay off the entire $5,000, at 1%, in only two years?

    You pay off the interest and a portion of the principal that best suits your needs.

    Let's put it this way, if you can top $50 a year in net profit (for the interest payment), the rest goes towards growth, income, etc. .

    Set up accounts with the local banks and suppliers. Buy locally.

    That's the real purpose of those kinds of programs.

    By the way, at about $250 to set up and run a hive, that $5,000 is only good for about 20 of them.
    Last edited by WLC; 02-27-2014 at 03:39 PM.

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