BEGINNING WOMEN FARMERS
CONFERENCE
FSA Farm Loan Programs
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Mission Statement
Types of Farm Loan Programs Available
Loan Application Process
Applicant Eligibility Requirements
Breaking Down Barriers for Beginning Farmers;
SDA Applicants
When The Loan Application is Denied
Additional Resources
Farm Loan Programs
Program Mission
To advance family farmers and ranchers build and
sustain family farms and ranches and develop the
financial and business expertise to qualify for
commercial credit.
“Serving Family Farms, Cultivating Opportunities”
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http://www.fsa.usda.gov/FSA/webapp?area=ho
me&subject=fmlp&topic=landing
Direct and Guaranteed Loans
DIRECT LOANS
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Available to farmers and ranchers unable to obtain credit from commercial
lenders
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Financed by Congressional appropriation; FSA makes and services the loan
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Temporary source of financing; Graduation to Commercial Credit is Goal
GUARANTEED LOANS
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FSA guarantees qualified loans though commercial lenders for up to 95
percent of the loan amount.
Financed by commercial lending institution; Lender makes and services the
loan.
May be combined with Direct Loan financing, under certain conditions
Direct Loan Program Overview
Loan Program
Direct
Farm
Ownership
(FO)
Direct
Operating
(OL)
Maximum
Loan
Amount
$300,000
$300,000
Use of Proceeds
•
Purchase farm
•
Construct and repair
buildings or make other
capital improvements
•
Soil & water conservation
•
Refinance farm debt
•
Purchase livestock, poultry,
equipment
•
Purchase feed, seed, farm
chemicals and supplies
•
Family subsistence and farm
operating expenses
•
Minor Improvements; Repairs
•
Refinance farm debt
Rates and Terms
•
Term: Up to 40 years
•
Interest rate: based on
Agency borrowing costs
•
Limited Resource interest
rate available
•
Term: 1 to 7 years
•
Interest Rate: based on
Agency borrowing cost
•
Limited Resource interest
rate available
Direct Loan Program Overview
Loan Program
Direct
Emergency
(EM)
Direct Farm
Ownership
Downpayment
Program
Maximum
Loan
Amount
$500,000
$225,000
Use of Proceeds
Rates and Terms
Non-Real Estate Term: 1
to 7 years
•
Restore or replace essential
property
•
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Pay all or part production
costs for disaster year
•
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Family Subsistence and
Farm Operating Expenses
•
Interest Rate: 3.75%
•
Reorganize operation
•
Refinance farm debt
•
Purchase farm
•
Min. Downpayment: 5%
Real Estate Term: Up to 40
years
Term: 20 years
• Interest rate: Direct FO
rate less 4% with a floor of
1.5%
•
Guaranteed Loan Program Overview
Loan Program
Maximum
Loan
Amount
Guaranteed
Farm
Ownership
(FO)
$1,214,000*
Guaranteed
Operating
(OL)
$1,214,000*
Use of Proceeds
Term: Up to 40 years
• Interest rate: Not to exceed
rate charged to lender's
average agricultural loan
customers
•
Same as Direct FO loan,
except the loan may be
used to refinance real
estate debts
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Same as Direct OL loan
•
*Adjusted
annually based
on inflation
*Adjusted
annually based
on inflation
Rates and Terms
Term: From 1 to 7 years
• Interest rate: Not to exceed
rate charged to lender's
average agricultural loan
customers
•
Interest Assistance: reduces
rate by 4%
Guaranteed Loan Program Overview
Loan Program
Maximum
Loan
Amount
Guaranteed
Conservation
Loan
(CL)
$1,214,000*
Land Contract
Guarantee
(LC)
$500,000*
Use of Proceeds
•
Facilitate conservation
practices
*Adjusted
annually based
on inflation
*No money
exchanges
between parties
as long as
applicant
makes
payments
•
Guarantees Contract
Installments, real estate
taxes and insurance or
outstanding principal
balance, for seller of
family farm through Land
Contract to Beginning
Farmer or SDA
Rates and Terms
•
Term: Varies; depends upon
type of collateral for loan
•
Interest rate: Not to exceed
rate charged to lender's
average agricultural loan
customers
•Term:
20 years
•Interest rate: fixed at Direct
FO loan rate in effect at time
the guarantee is issued, plus
three percentage points
•Requires
5% down payment
from applicant
Rural Youth Loans
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Finance modest, income-producing, agriculture-related,
educational project that falls under authorized loan purposes
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Eligibility:
 10 to 20 years old
 Lives in community 50,000 persons or less
 Project related to 4-H, FFA, Grange Youth
 Parental permission and supervision
 Project Advisor
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Maximum Loan Amount is $5,000
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Rates and Terms
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1 – 7 years, depending on loan amount and security
Direct OL interest rate
Farm Storage Facility Loan
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FSFL Program Purpose
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Provides low interest financing for producers to build or upgrade
farm storage and handling facilities to store the commodities they
produce.
Eligible Commodities
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Corn, grain sorghum, rice, soybeans, oats, peanuts, wheat, barley or
minor oilseeds harvested as whole grain
Corn, grain sorghum, wheat, oats or barley harvested as other-thanwhole grain
Pulse crops - lentils, chickpeas and dry peas
Hay
Renewable biomass
Fruits, Nuts and Vegetables - cold storage facilities
Farm Storage Facility Loan
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Maximum Loan Amount
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Loan Process
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Maximum loan amount of $500,000
Borrower must meet eligibility requirements
COC or STC approval required before construction can begin
$100 application fee
15% cash down payment required
Rates and Terms
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7 years; 10 years; or 12 years depending on amount of loan
Interest rate fixed for loan term at rate in effect the month the loan is
initially approved
Interest rate is equivalent to the rate of interest charged on Treasury
Securities of comparable term and maturity
www.fsa.usda.gov
To research for a
Farm Storage
Facility Loan
select
PRICE SUPPORT
Eligible Facility Loan Commodities
Corn, grain sorghum, rice, • soybeans, oats, peanuts, wheat, barley or
minor oilseeds harvested as whole grain
Corn, grain sorghum, wheat, oats, barley harvested
as other-than-whole grain
Pulse crops – lentils, chickpeas and dry peas
Hay
Renewable biomass
Fruits (includes nuts) and vegetables – cold storage facilities
Honey “NEW in 2011!!!!”
Maximum Loan Amount
$500,000 per loan.
Facility Loan Terms Available
7 years, 10 years or 12 years depending on the amount of the loan
Interest rate is fixed for the loan.
Cost of Obtaining a Loan
Each applicant will be charged • a nonrefundable $100 application fee.
CCC will pay all collateral lien • searches and recording fees for filing
Form UCC-1 and credit reports.
Applicants pay all other fees, such as severance agreements, attorney
fees, real estate lien search fees, and instrument filing fees.
For loans over $50,000, • applicants will be required to pay the cost of
obtaining a title search/opinion or title insurance.
FARM SERVICE AGENCY ADMINISTERED PROGRAMS
Emergency Conservation Program (ECP)
Trade Adjustment Assistance for
Farmers (TAAF)
ECP provides funding for farmers and
ranchers to rehabilitate farmland damaged
by wind erosion, floods, hurricanes, or other
natural disasters, and for carrying out
emergency water conservation measures
during periods of severe drought.
TAAF provides technical assistance and
cash benefits to eligible producers of
raw agricultural commodities, such as
fish or blueberries, after an associated
industry group petitions the Secretary
for assistance. If the national average
price in the most recent marketing year
for a commodity is less than 80 percent
of the national average price in the
preceding 5 marketing years as a result
of increased imports of that commodity,
producers may be eligible for TAAF
assistance.
Grassland Reserve Program (GRP)
GRP is a voluntary program
for landowners to protect, restore, and
enhance grasslands on their property.
USDA’s NRCS and FSA jointly implement
GRP to conserve vulnerable grasslands from
conversion to cropland or other uses
and conserve valuable grasslands by helping
maintain viable ranching operations.
Noninsured Crop Disaster Assistance Program (NAP)
NAP provides financial assistance to eligible producers affected by drought, flood, hurricane, or other natural disasters.
NAP covers noninsurable crop losses and planting prevented by disasters.
Landowners, tenants, or sharecroppers who share in the risk of producing an eligible crop are eligible.
Eligible crops include commercial crops and other agricultural commodities produced for food,
including livestock feed or fiber for which the catastrophic level of crop insurance is unavailable.
Also eligible for NAP coverage are controlled-environment crops (mushroom and floriculture), specialty crops (honey and maple sap),
and value loss crops (aquaculture, Christmas trees, ginseng, ornamental nursery, and turfgrass sod).
FSA COUNTY COMMITTEE ELECTION
FSA county committees are a link between the agricultural community and the
U.S. Department of Agriculture (USDA)
Their role is to deliver FSA farm programs at the local level and
work to ensure FSA agricultural programs serve the needs of local producers.
BECOME A NOMINEE! eligible individuals must sign nomination form.
The form includes a statement that the nominee agrees to serve if elected.
FSA is looking for YOU!
FSA county offices shall actively locate and
recruit eligible candidates identified as minority
and women farmers and ranchers as potential
nominees for the county committee elections
through outreach and publicity, including the
development of partnerships with communitybased organizations.
ROLE OF ADVISOR - IF NOT ELECTED
WHO CAN VOTE?
Agricultural producers of legal voting age
may be eligible to vote if they participate or
cooperate in any FSA program.
Advisors are appointed to county committees in counties
or multi-county jurisdictions that have significant numbers
of minority or women producers and lack such members on
FSA county committees.
A person who is NOT of legal voting age BUT
supervises and conducts the farming
operations of an entire farm also may be
eligible to vote.
Advisors play an important role by providing diverse
viewpoints and by representing the interests of minorities
and women in decisions made by county committees.
FSA state committees officially appoint advisors who are
recommended by county committees or community- based
organizations.
Members of American Indian tribes holding
agricultural land are eligible to vote if voting
requirements are met.
2013 ELECTION PERIOD
June 15, 2012 – KICKS OFF THE NEW ELECTION YEAR!!!
The nomination period begins. Request nomination forms from the local USDA Service Center or obtain online at http://www.fsa.usda.gov/ elections
Aug. 1, 2012 – Last day to file nomination forms at the local USDA Service Center
Nov. 5, 2012 – Ballots mailed to eligible voters
Dec. 3, 2012 – Last day to return voted ballots to the USDA Service Center
Jan. 1, 2013 – Newly elected county committee members take office.
https://public.govdelivery.com/accounts/USFSA/subscriber/new
Obtaining Loan Application Forms
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DIRECT LOANS
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Obtain application form and related information from:
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FSA County Office or USDA Service Center
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FSA web site: http://www.fsa.usda.gov
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eGov web site at http://forms.sc.egov.usda.gov/
GUARANTEED LOANS
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Directly contact commercial lender that makes farm loans
FSA County Office or USDA Service Center can provide list of
lenders known to make guaranteed loans
Direct Loan Application Documents
1.
Application Form
2.
Financial and Production History
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3.
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3 years of tax returns
3 years of production information
List of All Creditors- names, addresses, account numbers
Written Description of All Farm Education, On-the-Job Training,
and Farm Experience, including
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Workshops; Extension Service Seminars; Internships; Mentorship
Membership in vocational agricultural organization such as 4-H,
FFA, Grange Youth
Direct Loan Application Documents
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Projected Farm Operating/Farm Business Plan
 Balance Sheet for next 12 months
 Cash Flow Projections for next 12months
Evidence you cannot obtain commercial credit if requested
Verification of all off-farm employment and income, including
2 most recent earning statements
Legal description of farm property owned, leased or to be
owned or to be leased
Payment for credit report, which is obtained by the Agency
Getting Started
For FSA to make a farm loan:
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Applicant must meet general and program-specific eligibility
criteria
Must have adequate collateral for the loan
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150% of loan amount, except Downpayment and Rural Youth loans
All non-essential assets
Loan funds must be used for authorized purposes
Realistic business plan must show projected total income
exceeds projected total expenses (farm and off-farm)
Eligibility and Feasibility
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Two Step Process:
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Eligibility
 General Eligibility Requirements
 Loan-Specific Eligibility Requirements
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Feasibility
 A realistic business plan indicates you can repay the loan;
appraisals indicate there will be enough collateral for the
loan
General Eligibility Requirements
Direct and guaranteed loan applicants must:
1.
Be the owner-operator, or tenant-operator, of a family
farm
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All day-to-day management decisions
Substantial amount of the labor required
Recognized in the community as a family farm
2.
Be unable to obtain sufficient credit elsewhere
3.
Be a citizen, naturalized citizen, or a legal resident alien
4.
Possess legal capacity to incur the loan obligation
5.
Acceptable credit history
6.
Have necessary experience, determined by loan type
General Eligibility Requirements
7.
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10.
Not be delinquent on any Federal debt or unpaid Judgments
Have not caused the Agency a loss by receiving debt
forgiveness or payment of a guaranteed loss to lender, with
some exceptions
No convictions for planting, cultivating, growing, producing,
harvesting, or storing a controlled substance within the last
five years or be prohibited by Court Order from receiving
Federal assistance
No Federal Crop Insurance violations
Loan-Specific Eligibility Requirements
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Direct Operating Loan
 Meet
all general eligibility requirements
 Have farm experience equal to minimum 1 year full
production and marketing cycle
 7 year term limit for direct OL assistance, with 1
time 2-year waiver
 Beginning Farmers may receive no more than 10
years direct OL assistance
Loan-Specific Eligibility Requirements
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Direct Farm Ownership Loan
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Meet all general eligibility requirements
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No prior debt forgiveness on direct or guaranteed loan
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Must be owner-operator of farm after loan closing
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May not have direct FO outstanding for more than 10 years
prior to new FO loan closing
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3 years farm managerial experience out of 10 years prior
to date loan application submitted
Farm Managerial Experience
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Demonstrated through combination of:
 Education
 On-The-Job Training
 Farming Experience
Must be able to show documentation through:
 Tax
returns
 Farm Records
 Affidavits or other documentation
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Give details! Everything counts!
Farm Managerial Experience
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Education
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4-year or graduate college degree in agriculture-related field
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2-year degree from technical college in agriculture-related
field
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Vocational or general agriculture classes in high school along
with farm experience & successful 4-H/FFA agriculture projects
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Extension Service farm management courses, workshops,
seminars
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Community college or other academic courses, workshops,
seminars
Farm Managerial Experience
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On-The-Job Training
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Hired farm labor with management responsibilities
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Apprenticeship Program, current or recent
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Mentorship or Mentoring Partnership, current or recent
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Community Supported Agriculture training farm; Urban and
Community Farms (grower, not as participant)
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Participation in Refugee Agriculture Partnership Program
Farm Managerial Experience
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Farming Experience
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Owner, manager or operator of farm business for minimum
1 production & marketing cycle
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Monitor production and marketing
Hire, assign and supervise workers
Oversee maintenance of property and equipment
Determine when to cull livestock
Select seed varieties; when to plant/seed/harvest; when to
fertilize & method
Determine crop transportation or storage requirements
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Raised on farm, management decision-making
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Employed as farm manager or farm management
consultant for minimum 1 production & marketing cycle
Feasibility & The Farm Business Plan
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Establish realistic short term (1 year) & long term (5 year) goals
Financial statement based on supportable current values and accurate
reflection of all debts owed
Yield/production projections based on 3-year history (unless impacted by
disaster)
 Use of State Extension Service enterprise budgets
 Use of National Agricultural Statistics Service data
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Projected price based on current economic forecasting
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Expenses based on three year history
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Ending cash balance must be positive
Submitting the Loan Application
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Application submitted in name of actual operator of
farm; Agency mails or hand-delivers confirmation of
receiving loan application
Agency determines completeness of application
 Within 10 days applicant mailed detailed letter
advising what is needed to determine application
complete
Applicant given 20 calendar days to provide the
requested information
Submitting the Loan Application
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If after 20 days the application is still INCOMPLETE, additional
letter is sent providing for additional10 calendar days to
provide the requested information
If information is not received after the additional 10 days,
application is administratively WITHDRAWN and cannot be
reactivated
If/When application is COMPLETE, written confirmation is sent
to applicant within 10 calendar days
Agency goal is to make loan decision within 30 days
Breaking Through Barriers
Socially Disadvantaged Farmers (SDA)
and Beginning Farmers (BF)
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FSA targets a significant portion of its direct and guaranteed
farm ownership (FO) and operating loan (OL) funds to SDA and
BF farmers.
SDA & BF designation is funding source; not loan type
Must voluntarily declare race and ethnicity to receive targeted
funds
Breaking Down Barriers
An SDA applicant identifies self as:
 American
 African
Indian or Alaskan Native
American or Black
 Asian
 Native
Hawaiian or other Pacific Islander
 Hispanic
 Women
or Latino
Breaking Down Barriers
A Beginning Farmer is one who:
Meets loan eligibility requirements
 Has not operated a farm/ranch more than 10 years
 Provides substantial day-to-day labor & management
 Agrees to participate in loan assessment and borrower
training
 May not own real farm property exceeding 30% county
median acreage as determined by Census of Agriculture
(excludes OL applicants)
 Available resources insufficient to allow applicant to farm on
a viable scale
 All entity applicants must meet Beginning Farmer definition
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When The Decision is “No”
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Discuss the decision with the loan officer
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Seek alternatives that might change the decision, now or in
the future
Appeal – It’s Your Right
Agency Reconsideration of the decision
 Mediation by impartial third-party
 Appeal & have case heard by National Appeals Division
Hearing Officer
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When The Decision is “No”
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May just need additional or different documentation
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May take additional action or actions over time
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Credit
 Contact creditors /credit bureau ; correct credit report errors
 Build good faith & better credit record by meeting all
obligations over period of time (at least 1 year)
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Experience
 Consider leasing until experience criteria is met
 Get training/experience through coursework; apprenticeship
When The Decision is “No”
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Ask some “What If’s….”
Develop alternate farm plan with different enterprise mix
 Obtain or increase non-farm income
 Consider a smaller operation, at least to start
 Think about leasing or renting, rather than buying assets;
cheaper/practical
 Partner with someone or swap labor for use of equipment
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Keep in mind these are ideas intended to help you
reach your goals. Don’t be discouraged.
You always may submit an FSA loan application at
any time, even if you’ve been denied!
Additional Resources
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FSA: http://www.fsa.usda.gov
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Start 2 Farm: http://www.start2farm.gov
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National Agricultural Library: http://www.nal.usda.gov
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Risk Management Agency: http://www.rma.usda.gov
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Cooperative Extension System:
http://www.csrees.usda.gov/Extension/
Use other experts
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Farm Advisor/Farm Management Specialist
State Farm-Link Programs and State Departments of Agriculture
Other state or community organization