Farm Operating Loans and Loan Guarantees

 

The Farm Service Agency (FSA) offers direct and guaranteed loans to farmers and ranchers to promote, build, and sustain family farms for a thriving agricultural economy. The goal of FSAs farm loan program is to provide supervised credit and management assistance to eligible farmers to become owners or operators, or both, of family farms or to continue such operations when credit is not available elsewhere. Operating loans (OL) must be essential to the success of the farm operation and should establish and/or maintain financial viability. Guaranteed loans are available to farmers who may not meet loan qualifications from a commercial lender. Guaranteed loans are made and serviced by commercial lenders, such as banks, Farm Credit System institutions, or credit unions.

Active 10.406 Farm Service Agency, Department of Agriculture E - Direct Loans; F - Guaranteed/Insured Loans Not applicable. Farm and Rural Development Act, as amended, Subtitle B, Sections 311-317, Public Law 92-419, 7 U.S.C. 1942; Agriculture Act of 1961, Title III, Public Law 87-128
The Agriculture Improvement Act of 2018, Public Law 115-334 General Eligibility for Direct Loans The following requirements must be met to qualify for an FSA Direct Operating Loan, unless otherwise stated in the eligibility requirements for the loan: I. Be a family farmer; II. Have a satisfactory credit history; III. Be a citizen of the United States, including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Commonwealth of the Northern Mariana Islands, Republic of Palau, Federated States of Micronesia and the Republic of Marshall Islands; a U.S. non- citizen national or a qualified alien under federal immigration law; IV. Be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs; V. Have the legal capacity to incur the obligations of the loan; VI. Not have outstanding unpaid judgments obtained by the U.S. in any court, excluding judgments filed in U.S. Tax Courts; VII. Not be delinquent on a federal debt; VIII. Must not have provided FSA with false or misleading documents or statements in the past; IX. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years; X. Not have received debt forgiveness from FSA (certain exceptions apply); and XI. Be within the time restrictions as to the number of years they can receive FSA assistance. General Eligibility for Guaranteed Loan Applicants An applicant, including members of an entity applicant, must meet the following eligibility criteria to obtain a guaranteed loan: I. Be a U.S. citizen or legal resident alien which includes Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and certain former Pacific Trust Territories II. Have an acceptable credit history as determined by the lender III. Demonstrate ability to repay the loan IV. Provide sufficient security for the loan V. Have the legal capacity to incur the obligations of the loan VI. Be unable to obtain a loan without a guarantee VII. Have not received FSA debt forgiveness on more than three occasions on or prior to April 4, 1996; or any occasion after April 4, 1996 VIII. Be the owner or tenant operator of a family farm after the loan is closed. For Operating Loans, the applicant must be the operator of a family farm after the loan is closed. IX. Not be delinquent on any federal debt X. Not have outstanding unpaid judgments obtained by the U.S. in any court excluding judgments filed in U.S. Tax Courts; XI. Not have provided FSA with false or misleading documents or statements in the past; XII. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years. Applications may also be made by entities. Entities are corporations, cooperatives, joint operations, partnerships, trusts, and limited liability companies. Their members/stockholders must meet these same eligibility requirements. The entity must also be authorized to operate a farm or ranch in the state where the land is located. For socially disadvantaged members, they must hold a majority interest in the entity applicant to receive targeted funding. Individual/Entity, Socially Disadvantaged Applicants (SDA)/Non-SDA; SDA applicant or farmer is an individual or entity who is a member of a socially disadvantaged group. SDA group is a group whose members have been subject to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities. These groups consist of: American Indians or Alaskan Natives, Asians, Blacks or African Americans, Native Hawaiians or other Pacific Islanders, Hispanics, and women. Applicants for direct loans must be unable to obtain credit elsewhere and applicants for guaranteed loans must be unable to obtain credit without the guarantee. Preapplication coordination is required. No loan will be made until all Federal and state statutory and regulatory environmental requirements have been complied with. 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards applies to this program. Applicants may apply for direct loans at local FSA offices. If the total outstanding direct operating loan debt combined with direct farm ownership debt will be less than $50,000, it would be considered a direct microloan. Microloans have a separate application process. Guaranteed loans may be available from local commercial lenders who apply for loan guarantees from FSA. If a direct or guaranteed loan is approved, FSA will notify the applicant in writing of: o the approved use of loan funds o the interest rate o the term of the loan o the collateral that will be required to pledge to secure the loan o when the money is expected to be available o any pre-loan closing requirements o Responsibilities as an FSA direct loan borrower. The applicant will need to sign and return the letter accepting the loan conditions. Loan closing will be scheduled as soon as possible after loan approval. Normally, loan funds are provided within 15 days of approval. If the application for a guarantee is approved, FSA will provide written notification to the lender. FSA receives funding for loans and guarantees on a fiscal year basis, and the demand for some loan types may exceed the level of funding received. When this occurs, a loan can be approved subject to the availability of funding, but it cannot be closed until additional funding is received. Not applicable. Not applicable. FLP applicants and borrowers have the right to request reconsideration, file appeals, and enter alternate dispute resolutions about adverse decisions. If a loan is not approved, FSA will provide written notification of opportunities to request: Reconsideration Applicants are provided with the opportunity to meet with the FSA loan officer to present additional information and explain why you believe FSA's decision may be in error; Mediation A process for resolution of a disagreement. A trained neutral mediator assists two or more parties who disagree by looking at the issues, considering all available options, and attempting to agree on an acceptable solution; Appeal to the Department of Agriculture National Appeal Division (NAD), an independent organization within USDA, where you may present evidence which demonstrates why you believe that FSA's decision may be wrong. Applicants may reapply for an FSA loan at any time. Applicants who were given a denial of a loan request will be advised of potential actions or alternatives that might resolve or help resolve the issues that resulted in the denial of the loan request. Applicants previously given a loan denial must establish that substantial change has occurred, since the denial decision. Not applicable. Direct Operating Loan funds must be essential to the success of the farming operation and must be used for the following purposes: I. Costs associated with reorganizing a farm to improve its profitability; II. Purchase of livestock, including poultry, farm equipment, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes; III. Farm operating expenses, including but not limited to, feed, seed, fertilizer, pesticides, farm supplies, repairs and improvements which are to be expensed, cash rent and family living expenses; IV. Scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes; V. Minor improvements or repairs to buildings VI. Refinance certain farm-related debts, excluding real estate; VII. Land and water development, use, or conservation; VIII. Loan closing and borrower training costs Guaranteed Operating Loan Funds may be used to: I. Payment of costs associated with reorganizing a farm to improve its profitability; II. Purchase of livestock, including poultry, and farm equipment or fixtures, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes; III. Payment of annual farm operating expenses, examples of which include feed, seed, fertilizer, pesticides, farm supplies, repairs and improvements which are to be expensed, cash rent and family subsistence; IV. Payment of scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes; V. Payment of costs associated with land and water development for conservation or use purposes; VI. Refinancing indebtedness incurred for any authorized OL purpose, when the lender and applicant can demonstrate the need to refinance; VII. Payment of loan closing costs; VIII. Payment of costs associated with complying with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. § 655 and 667); this purpose is limited to applicants who demonstrate that compliance with the standards will cause them substantial economic injury; IX. Payment of training costs required or recommended by the Agency; X. Real Estate Improvements; XI. Processing or Marketing Purposes; XII. Refinancing; XIII. LOC Purposes: Loan funds under a line of credit may be advanced only for the following purposes: a. Payment of annual operating expenses, family subsistence, and purchase of feeder animals b. Payment of current annual operating debts advanced for the current operating cycle; under no circumstances can carry-over operating debts from a previous b. operating cycle be refinanced; c. Purchase of routine capital assets, such as replacement of livestock, that will be repaid within the operating cycle; d. Payment of scheduled, non-delinquent term debt payments provided the debt is for authorized FO or OL purposes; e. Purchase of cooperative stock for credit, production, processing, or marketing purposes; f. Payment of loan closing costs. Not applicable. Not applicable. Applicants must maintain accurate financial and production records during the period of the loan. Statutory formula is not applicable to this assistance listing.

Matching requirements are not applicable to this assistance listing.

MOE requirements are not applicable to this assistance listing. The repayment of all Direct and Guaranteed Operating loans is based on the applicant’s ability to repay and the useful life of the security. In no event will the term of the loan exceed 7 years from the date of the note. Method of awarding/releasing assistance: Lump. Consult the appropriate FSA State office where the property is located. For a list of FSA State offices with telephone numbers and addresses, visit FSA website at www.fsa.usda.gov to locate nearest office. James Jackson
1400 Independence Avenue, SW

Washington, DC 20250 US
james.jackson@usda.gov
Phone: 202-692-4940 http://www.fsa.usda.gov/programs-and-services/farm-loan-programs/index 12-1140-0-1-351 (Guaranteed/Insured Loans) FY 22$25,490,000.00; FY 23 est $14,574,000.00; FY 24 est $14,574,000.00; FY 21$8,746,000.00; FY 20$1,960,000,000.00; FY 19$1,051,944,000.00; FY 18$1,085,291,000.00; FY 17$1,366,897,000.00; FY 15$1,365,450,000.00; FY 16 est $1,393,443,000.00; - (Direct Loans) FY 22$51,242,000.00; FY 23 est $24,905,000.00; FY 24 est $24,905,000.00; FY 21$24,211,000.00; FY 20$1,550,133,000.00; FY 19$1,147,713,000.00; FY 18$1,112,835,000.00; FY 17$1,284,035,000.00; FY 16 est $1,252,004,000.00; FY 15$1,251,216,000.00; - Direct Farm Operating Loans up to $400,000. ($50,000 total or less is considered a microloan); Guaranteed Farm Operating Loans up to $1,776,000. (Amount adjusted annually for inflation.) 7 CFR, Part 761, 762, 764; Farm Service Agency Fact Sheets; FSA Handbook 1 FLP, 2 FLP, 3-FLP, & 1-APP; FSA Program Aids 1610 "Farm Service Agency Producer's Guide to Loan Programs"; FSA Program Aids 1620 "Lender's Guide to FSA Loan Programs; FSA Brochure FSA-BK-01 "Your Guide to FSA Farm Loans"; All information is available on FSA website at: www.fsa.usda.gov. Not applicable.