The Farm Service Agency (FSA) offers a variety of Farm Loan Programs for farmers and ranchers. FSA makes direct and guaranteed farm ownership (FO) and operating loans (OL) to family-size farmers and ranchers who cannot obtain funding from a commercial lender. FSA Farm Loans may be used to purchase acreage, livestock, farm equipment, feed, seed and other supplies. Loans can also be used for making farm improvements and constructing buildings.
Direct and Guaranteed Loans
A direct loan is made directly to the applicant from FSA. With a direct loan, the loan applicant is FSA’s customer. A guaranteed loan is made through the applicant’s bank. With a guaranteed loan, the bank is FSA’s customer. Mark Aycock, an FSA Farm Loan Manager from the Marshfield FSA office, noted that direct loans cannot be used to refinance real estate; however, guaranteed loans can. Many of the basic eligibility requirements for these loans are the same. For an applicant to be eligible, they must:
1. Be a citizen of the United States (or a legal resident alien)
2. Have an acceptable credit history
3. Have the legal capacity to incur the obligation of the loan
4. Be unable to obtain credit elsewhere
5. Be the operator or tenant operator of a family farm after the loan is closed. For an FO loan, the operator also needs to own the farm.
Other specific eligibility requirements can be determined by contacting your local FSA office.
Loans for Beginning Farmers and Ranchers
These loans are for individuals or entities that are related by blood or marriage who have operated a farm/ranch for no less than three years and no more than 10. Eligible beginning farmers/ranchers can receive an FO loan to buy property. A joint financing arrangement can also be made for new farmers/ranchers.
Loans for Socially Disadvantaged Persons (Minorities and Women)
An FSA loan can be made to socially disadvantaged persons who have been subject to racial, ethnic and gender prejudice. The socially disadvantaged person applying must meet all the loan eligibility requirements. “Money for loans made to SDA farmers/ranchers comes from special funds set aside especially for this group,” Mark explained. FSA will also help SDA farmers by providing information and assistance on developing good farm management, problem solving skills and utilization of resources.
Emergency Loans
The applicant must own or operate a farm/ranch in an area officially declared a disaster. The applicant must be unable to obtain credit either directly or with an FSA Guarantee from a commercial lender by applying for the needed loan at the lender’s rates and terms. The applicant must have insurance on the property that was lost as a result of the disaster. The emergency loan application must be filed within eight months of the emergency designation date.
Rural Youth Loans
These loans provide a unique opportunity for rural youth ages 10 to 20 who want to start an agricultural based business or project. One of the requirements is participation in 4-H or FFA. Eligible youths can receive up to $5,000 to purchase livestock, seed and supplies. The funds can also be used to buy, repair or rent the tools needed for the project. A project advisor will assist with the business/project plans, budget and repayment schedule. The repayment schedule is determined by the type of project which the loan had been made for. Mark Aycock said that FSA tends to receive quite a few applications for Rural Youth Loans.
Mark said, “FSA is known as ‘The Lender of First Opportunity’.”
For more information contact your local FSA Office or United States Department of Agriculture Service Center.
