Farm Commons focuses on creating flexible, adaptable tools that empower farmers to move forward in addressing their legal concerns. Farmers (and business owners of all types) are sometimes under the misimpression that legal matters can be addressed by simply using the “correct” form or language. This often isn’t the case. This toolbox is designed primarily to help farmers build their own strategy to avoid legal problems through good communication, which is also good legal protection should a problem materialize. This toolbox IS NOT legal advice specific to any circumstance and should not be used as such.

The tools we provide are meant to help farmers who are seeking personal loans to help finance their farm operation or who are in the process of creating a promissory note. The checklist and sample promissory note include plenty of options and alternative ways to draft provisions in a promissory note to get your imagination flowing. The story of Mother Earth Farms LLC is woven throughout the guide to illustrate the importance of going through the process of negotiating the terms up front. It also serves to help the reader sense what it would actually be like to have the tough conversations with a friend or family member upfront.

Also, be sure to review the special legal section at the end. In What’s the difference between a gift and a loan and why does it matter? you’ll learn more about how you can prevent your friend or family member who is lending you money from having to be subject to hefty gift taxes. The other special section, Is your promissory note a security and why does it matter?, will help you navigate ways to prevent your promissory note from falling within the legal definition of a “security,” which you’ll most likely want to do. State and federal securities laws can be very time-consuming and expensive to deal with if you have to comply.

After opening this toolbox, farmers should:

1. Understand the importance of having a promissory note in place for all personal loans they receive for their farm operation
2. Know the basic elements of a thorough promissory note
3. Gain a sense of how to adapt promissory note elements for different situations
4. Have the resources they need to begin a promissory note adapted to their own unique situation