farm service agency
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Farm Service Agency. Farm Loan Programs. Loan Programs. Direct Loans FSA makes and services direct loans and provides supervised credit Funds come from the U.S. Treasury Guaranteed Loans The lender makes and services the loan - PowerPoint PPT PresentationTRANSCRIPT
Farm Service AgencyFarm Service Agency
Farm Loan Programs
Loan ProgramsLoan Programs
Direct LoansDirect Loans
– FSA makes and services direct loans and providesFSA makes and services direct loans and provides supervised creditsupervised credit
– Funds come from the U.S. Treasury Funds come from the U.S. Treasury
Guaranteed LoansGuaranteed Loans
– The lender makes and services the loanThe lender makes and services the loan
– FSA guarantees loans made by conventional lenders FSA guarantees loans made by conventional lenders for up to 95 percent of any loss for up to 95 percent of any loss
Loan Program DeliveryLoan Program Delivery
Direct loan requests are processed and Direct loan requests are processed and serviced in local offices. serviced in local offices.
Guaranteed requests are completed by the Guaranteed requests are completed by the lender and producer and submitted to FSA lender and producer and submitted to FSA for processingfor processing
Upon request, FSA staff must assist Upon request, FSA staff must assist applicants in completing paperworkapplicants in completing paperwork
Most adverse decisions are appealableMost adverse decisions are appealable
Farm Ownership (FO) LoansFarm Ownership (FO) Loans
Farm Operating (OL) LoansFarm Operating (OL) Loans
Emergency (EM) Loans (only direct)Emergency (EM) Loans (only direct)
Types of Farm Loan ProgramsTypes of Farm Loan Programs
Loan LimitationsLoan LimitationsDirect FO - $200,000Direct FO - $200,000
Direct OL - $200,000Direct OL - $200,000
Direct OLDirect OL Youth - $5,000Youth - $5,000
EM $500,000 EM $500,000 (or amount of loss,(or amount of loss, whichever is lower) whichever is lower)
Guaranteed:Guaranteed:
Combined G-FO Combined G-FO
and G-OL cannot and G-OL cannot
exceed $813,000 exceed $813,000
(changes annually (changes annually based upon based upon “Prices Paid by “Prices Paid by Farmers” index Farmers” index calculated by calculated by USDA-NASS)USDA-NASS)
Farm Loan ProgramsFarm Loan ProgramsGeneral Eligibility RequirementsGeneral Eligibility Requirements
Direct and guaranteed applicants mustDirect and guaranteed applicants must::
– Be unable to obtain sufficient credit elsewhereBe unable to obtain sufficient credit elsewhere– Be a citizen or a legal resident alien Be a citizen or a legal resident alien – Possess legal capacity to incur the loan Possess legal capacity to incur the loan
obligationobligation– Have acceptable credit historyHave acceptable credit history– Be the owner-operator or tenant-operator of a Be the owner-operator or tenant-operator of a
family farmfamily farm
General Eligibility RequirementsGeneral Eligibility Requirements(Cont.)(Cont.)
Direct and guaranteed applicants mustDirect and guaranteed applicants must::
– Not be delinquent on federal debtNot be delinquent on federal debt– Not have caused the agency a loss byNot have caused the agency a loss by receiving debt forgiveness (somereceiving debt forgiveness (some exceptions) exceptions) – Not have been convicted of planting, Not have been convicted of planting, cultivating, growing, producing, cultivating, growing, producing, harvesting, or storing a controlledharvesting, or storing a controlled substance within the last five yearssubstance within the last five years
A direct loan applicant must:A direct loan applicant must:
– Meet general eligibility criteria Meet general eligibility criteria
– Have applicable education, training, or Have applicable education, training, or farm experience that provides reasonable farm experience that provides reasonable prospects of success (For an FO loan, prospects of success (For an FO loan, must have participated in the operations of must have participated in the operations of a farm or ranch for at least 3 years) a farm or ranch for at least 3 years)
FSA Direct LoansFSA Direct Loans
FSA Direct LoansFSA Direct Loans(Cont.)(Cont.)
A direct loan applicant must:A direct loan applicant must:
– Develop a realistic Farm Business Plan Develop a realistic Farm Business Plan that projects repayment ability for the loanthat projects repayment ability for the loan
– Provide adequate collateral for the loanProvide adequate collateral for the loan
– Agree to take borrower training courses Agree to take borrower training courses and “graduate” to private sector credit and “graduate” to private sector credit when able to do sowhen able to do so
FSA Direct LoansFSA Direct Loans
Corporations, cooperatives, joint Corporations, cooperatives, joint operations, trusts and partnerships may be operations, trusts and partnerships may be eligible:eligible:
their members/stockholders must meet their members/stockholders must meet the program eligibility requirementsthe program eligibility requirements
the entity must also be authorized to the entity must also be authorized to operate a farm in the State where the operate a farm in the State where the farm is locatedfarm is located
Direct Loan MakingDirect Loan Making
Operating LoansOperating Loans
Purposes:Purposes:Purchase EquipmentPurchase Equipment
Purchase LivestockPurchase Livestock
Production ExpensesProduction Expenses
Refinance operating expenses (other than FSA)Refinance operating expenses (other than FSA)
Farm Operating Loans are repaid in 1 to 7 Farm Operating Loans are repaid in 1 to 7 years years
Direct Loan MakingDirect Loan MakingYouth LoansYouth Loans
Under the direct Farm Operating (OL) Under the direct Farm Operating (OL) ProgramProgram
Program RequirementsProgram Requirements - Must meet eligibility requirements, except over - Must meet eligibility requirements, except over 10 yrs. old and under 2110 yrs. old and under 21 - Must have recommendation from advisor (4-H,- Must have recommendation from advisor (4-H, Vo-Ag teacher, scout leader, etc.)Vo-Ag teacher, scout leader, etc.)
- Live in rural area or town of less than 10,000 - Live in rural area or town of less than 10,000 populationpopulation
Direct Loan Making Direct Loan Making Farm Ownership LoansFarm Ownership Loans
Farm ownership loans can be repaid in up to Farm ownership loans can be repaid in up to 40 years40 years
Loan Purposes:Loan Purposes:
Purchase LandPurchase Land
Make Capital ImprovementsMake Capital Improvements
Promote Soil and Water ConservationPromote Soil and Water Conservation
Loan closing and related expensesLoan closing and related expenses
Direct Loan Making Direct Loan Making Emergency LoansEmergency Loans
– Used for real estate and operating purposes Used for real estate and operating purposes where a disaster or quarantine has been declaredwhere a disaster or quarantine has been declared
Purposes:Purposes:
– Refinance debtsRefinance debts– Repair/replace farm propertyRepair/replace farm property
BuildingsBuildings
Machinery/LivestockMachinery/Livestock
FeedFeed
Other itemsOther items
Where Do We Apply?Where Do We Apply? FSA Direct LoansFSA Direct Loans
Applications for direct loan assistance may be Applications for direct loan assistance may be submitted to the FSA local office serving the submitted to the FSA local office serving the area where the operation is located area where the operation is located
Local FSA offices are listed in the telephone Local FSA offices are listed in the telephone directory under U.S. Government, Department of directory under U.S. Government, Department of Agriculture, Farm Service AgencyAgriculture, Farm Service Agency
Applications, other forms, Office locations are Applications, other forms, Office locations are available online at: www.fsa.usda.govavailable online at: www.fsa.usda.gov
Guaranteed loans are:Guaranteed loans are:Made and serviced by local agricultural Made and serviced by local agricultural lenderslenders
Funded by the lenderFunded by the lender
Often used to help lenders continue with Often used to help lenders continue with customers who have experienced setbackscustomers who have experienced setbacks
GUARANTEED LOANS-ELIGIBILITYGUARANTEED LOANS-ELIGIBILITY
To qualify for an FSA Guarantee, a loan To qualify for an FSA Guarantee, a loan applicant must:applicant must:
– Meet the general eligibility requirementsMeet the general eligibility requirements– be unable to obtain a loan without a be unable to obtain a loan without a
guaranteeguarantee– Have a feasible plan and adequate Have a feasible plan and adequate
collateral as determined by the lendercollateral as determined by the lender
Farm Ownership (FO) LoansFarm Ownership (FO) Loans
Farm Operating (OL) LoansFarm Operating (OL) Loans
Operating Lines of CreditOperating Lines of Credit
Types of FSA Guaranteed Types of FSA Guaranteed Farm Loans Farm Loans
Guaranteed Loan Making
Line of Credit Loans (LOC) - Uses
– funds can be advanced and repaid throughout the year for up to 5 years
– annual production expenses– family living expenses – purchase of feeder livestock
Guaranteed Loan Making
The interest rate a lender charges:
– must not exceed what that lender would normally charge its average farm customer
– can be fixed or variable
Where Do We Apply?Where Do We Apply?
GUARANTEED LOANSGUARANTEED LOANS
For guaranteed loans, applicants must For guaranteed loans, applicants must apply to a commercial lender who apply to a commercial lender who participates in the Guaranteed Loan participates in the Guaranteed Loan ProgramProgram
Local FSA offices have lists of Local FSA offices have lists of participating lendersparticipating lenders
Program FundingProgram Funding
Loan Programs are funded by annual Loan Programs are funded by annual Congressional AppropriationsCongressional Appropriations
Appropriation levels may fall short of demand, Appropriation levels may fall short of demand, especially direct farm ownership loansespecially direct farm ownership loans
Loan funds are allocated to statesLoan funds are allocated to states
There are separate allocations of SDA and There are separate allocations of SDA and beginning farmer targeted fundsbeginning farmer targeted funds
Socially Disadvantaged Applicant Socially Disadvantaged Applicant (SDA)(SDA)
As defined by law, an SDA applicant is one who As defined by law, an SDA applicant is one who is a member of a socially disadvantaged group is a member of a socially disadvantaged group whose members have been subjected to racial, whose members have been subjected to racial, ethnic, or gender prejudice because of their ethnic, or gender prejudice because of their identity as a member of a group, without regard identity as a member of a group, without regard to their individual qualities.to their individual qualities.
SDA groups are African Americans, American SDA groups are African Americans, American Indians, Alaskan Natives, Hispanics, Asians, Indians, Alaskan Natives, Hispanics, Asians, Pacific Islanders, and Women.Pacific Islanders, and Women.
SDA LoansSDA Loans
FSA does not have a specific SDA loan FSA does not have a specific SDA loan program, but rather targets funds in program, but rather targets funds in existing programs to applicants that meet existing programs to applicants that meet the definitionthe definition
The targets are set by lawThe targets are set by law
SDA loan applicants must meet loan SDA loan applicants must meet loan program requirementsprogram requirements
Beginning Farmer LoansBeginning Farmer Loans
FSA provides direct and guaranteed loans FSA provides direct and guaranteed loans to beginning farmers and ranchers to beginning farmers and ranchers
The law requires FSA to target a portion of The law requires FSA to target a portion of its direct and guaranteed farm ownership its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to (FO) and operating loan (OL) funds to beginning farmers beginning farmers
Beginning Farmer LoansBeginning Farmer Loans
A beginning farmer or rancher is an individual or A beginning farmer or rancher is an individual or entity who:entity who:
(1) has not operated a farm or ranch for (1) has not operated a farm or ranch for more than 10 yearsmore than 10 years
(2) meets the loan eligibility requirements of (2) meets the loan eligibility requirements of the program to which he/she is applyingthe program to which he/she is applying
(3) for an FO loan, does not own a farm(3) for an FO loan, does not own a farm greater than 30 percent of the averagegreater than 30 percent of the average size farm in the countysize farm in the county
Application TipsApplication Tips
A good farm business plan is criticalA good farm business plan is critical
– Set short and long term goalsSet short and long term goals– Production projections should supported by Production projections should supported by
recordsrecords– Plan conservativelyPlan conservatively– Good financial records are importantGood financial records are important– Get help from experts (Extension, State Get help from experts (Extension, State
Programs, etc.)Programs, etc.)
Application TipsApplication Tips
Application forms are available from FSA Application forms are available from FSA OfficesOffices
All forms are available via internet as wellAll forms are available via internet as well
You cannot be denied an application or You cannot be denied an application or other formsother forms
Application TipsApplication Tips
Don’t be afraid to ask for help to complete Don’t be afraid to ask for help to complete the paperworkthe paperwork
FSA employees will help (actually they FSA employees will help (actually they must) if you askmust) if you ask
Other sources of free assistance-Other sources of free assistance-Extension ServiceExtension Service
USDA Outreach Grant Recipient Organizations USDA Outreach Grant Recipient Organizations
1-MS Association of Cooperatives 1-MS Association of Cooperatives
2- ASU Small Farm Outreach2- ASU Small Farm Outreach
Need More Information?Need More Information?
Contact the Local FSA OfficeContact the Local FSA Office
Visit the FSA Website:Visit the FSA Website:
www.fsa.usda.govwww.fsa.usda.gov
Call National Helpline toll-free atCall National Helpline toll-free at
1-866-538-26101-866-538-2610
Farm Service AgencyFarm Service Agency
Farm Loan ProgramsFarm Loan Programs
QUESTIONS?QUESTIONS?