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?