FSA Farm Loans, offered by the United States Department of Agriculture (USDA), are financial assistance programs designed to support farmers in the United States. The USDA’s Farm Service Agency (FSA) administers these loan programs to provide access to credit for agricultural producers who may not qualify for conventional commercial loans.
To start or continue to grow in agriculture, you need farm loans that can help you in purchasing or renting land, equipment, disaster management, etc. But which type of USDA farm loan to take? or what are the interest rates and requirements? & how to apply?
If these questions are in your mind, then this article is going to help you in understanding farm loans offered by USDA FSA, programs, requirements, eligibility, interest rates & application process.
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The Federal government gives money to FSA, and they use it to make loans under this program. FSA helps people who borrow directly from them. They give advice & support to borrowers to help them understand if they have enough resources like land, buildings, machines, money, and plans for their business.
Under this program, Farm ownership, operating & emergency loans are available.
Eligibility Requirements
Farmers can get FSA farm loan through their programs. Loans offered by FSA are temporary and it helps you to get mature for commercial credits. So before applying for a loan, let’s get to know about various loan programs of FSA.
Guaranteed loans are special loans provided by banks, the Farm Credit System, credit unions, and other commercial lenders. When someone gets a guaranteed loan, the FSA (Farm Service Agency) promises to help the lender if the borrower can’t pay back the loan. They will cover up to 95% of the losses for the lender. The FSA makes sure that all eligible loan guarantees are approved & also keeps an eye on what the lender does.
Under this program, Farm ownership, operating, and conservation loans are available.
Eligibility Requirements
A land contract guarantee is a special agreement that gives the seller of a farm or ranch some financial protection. This protection comes when they sell the property using a land contract to a farmer or rancher who is just starting out or facing social disadvantages. It helps ensure that the seller will receive the agreed-upon payment for the property.
Eligibility Requirements
This Loan Program helps to give money to certain lenders who have a good history of lending money in Indian areas & know how to work with the Bureau of Indian Affairs. These lenders then use the money to make loans to tribes, tribal members, and tribal groups so they can buy pieces of land that are divided into many small parts.
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Once you have understood about loan programs, then you will need to know types of loan offered by FSA under USDA. You may need one or more types of loan depending on your credit requirements.
Farm Ownership loans can help you buy or make your farm or ranch bigger. You can also use these loans to build new structures or improve the ones you already have on your farm or ranch. They can cover the costs of closing the deal and help you with soil and water conservation & protection.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Direct Farm Ownership | US $600,000 | Fixed Interest Rate | Up to 40 years |
Direct Farm Ownership Participation | US $600,000 | For farm owners, the interest rate is reduced by 2% if at least 50% of the loan comes from another lender. However, even with this reduction, the lowest interest rate they will have to pay is 2.5%. | Up to 40 years |
Direct Downpayment | Out of the total amount, 45% will be taken from the smaller value of the following options: the farm or ranch’s buying price, the appraised value of the property. Maximum laon amount: US $300,150 | Fixed Interest Rate | Up to 40 years |
Operating loans are like a helping hand to buy animals & tools. It also help you pay for small fixes on your property and cover yearly costs of running your business.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Direct Operating | US $400,000 | Fixed Interest Rate | Up to 1 to 7 years |
Emergency loans are there to support you if something bad happens, like a natural disaster damaging your farm or ranch. These loans can be used to fix or replace important things on your farm, cover some of the costs of producing crops or animals during the disaster year, pay for necessary family expenses, reorganize your farming business & even pay off certain debts. They are meant to help you get through tough times and get your farm back on track.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Direct Emergency | US $500,000 100% actual or physical losses (lowest among them) | Fixed Interest Rate | Up to 1 to 7 years (for non real estate purpose) |
Microloans are loans that help people who own or work on farms. These loans are easier and faster to apply for, and you don’t need to fill out as much paperwork. They are made specifically for smaller farms, non-traditional farms, and niche-type operations.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Direct Farm Ownership Microloan | US $50,000 | Fixed Interest Rate | Up to 25 years |
Direct Operating Microloan | US $50,000 | Fixed Interest Rate | Up to 25 years |
EZ Guarantee loans are special loans for farmers that make it easier to buy or run a farm. The application process is shorter & there is less paperwork to fill out. These loans are made for smaller farms, non-traditional farms and farms that focus on specific types of products or activities.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Guranteed Farm Ownership | Adjusted annually for inflation | Can be negotiated | Up to 40 years |
Guranteed Operating | Adjusted annually for inflation | Can be negotiated | Up to 1 to 7 years |
EZ Gurantee Farm Ownership | US $100,000 | Can be negotiated | Up to 40 years |
EZ Gurantee Operating | US $100,000 | Can be negotiated | Up to 1 to 7 years |
Guranteed Conservation Loan | Adjusted annually for inflation | Can be negotiated | Not more than 30 years |
Highly Fractionated Indian Land Loans are a special kind of loans that help tribes, tribal members & tribal groups buy small parts of land that are divided among many people. These loans are given by intermediary lenders.
A land contract guarantee is a way to provide financial security to a person selling a farm or ranch. This guarantee is given when the seller sells the land to a new farmer who is just starting or facing social disadvantages. The seller can choose one of two types of guarantees:
Both of these guarantees are meant to protect the seller & offer assurance when selling their farm or ranch to a new farmer.
Loan Type | Maximum Loan Amount | Rates | Terms |
---|---|---|---|
Land Contract Gurantee | US $500,000 | Fixed Interest Rate (Cannot exceed the direct farm ownership interest rate + 3%. | Must be amortized for a minimum of 20 years with equal payments during the term of the guarantee. The guarantee period is 10 years. |
After understanding your requirements, contact your local commercial lender to assist you in preparing forms for the application. You can get the application form from the local Farm Service Agency office or can download and fill from the official website: Guranteed Loan Application Form Portal
After filling he form correctly, your lender will have to submit the form at FSA. The organization will review your form, and if any document or information is found missing, then your lender will be notified within 5 days. If your application is approved, FSA will notify the lender in writing.
But, in case your application is rejected, then FSA will notify your lender in writing. They will mention reasons of rejection, oppurtunities & mediations possible.
In this loan program no commercial lender is involved, therefore you can directly apply for this loan program at FSA. Visit the local FSA office and get connected with the local official to get help in completing your form. They will provide you receipt of service when you ask for assistance, application, or submit the form.
You can submit the form of direct loan program by mailing your application to the local FSA office, fixing an appointment, or electronically.
After submitting application form, you will be notified within 10 days, if any form or information is missing. FSA will make a final decision on approval or rejection of your loan request within 60 days after recieving all required information.
If your farm loan request is approved under direct loan program, then FSA will notify you in writing about loan term, interest rates, approved use of funds, your responsibilities, etc.
You should have a credit score of 750 or more to get USDA farm loans easily.
What is considered a farm by USDA?According to the USDA, a farm is a place where farmer grow and sell, or would normally grow and sell, at least $1,000 worth of agricultural products in one year.
What is the federal farm loan?The Federal Farm Loan Act of 1916 was a law in the United States aimed to help farmers who lived in rural areas. Its goal was to give them easier access to money so they could borrow it and improve their farms. This law was passed on July 17, 1916, and it aimed to support and boost the farming community.
Aditya Abhishek has completed Bachelor Of Science in Agriculture from SDSUV, Uttarakhand. He focuses on learning and delivering knowledge on Agriculture and Home Gardening. He created Agriculture Review as a common platform for all nature enthusiast to learn better practices of agriculture, gardening & shop quality products & services.