USDA Farm Loan Program

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USDA - Farm Service Agency
Farm Loan Programs
America’s Lender of First Opportunity!
America’s Lender of First
Opportunity!

United States Department of
Agriculture (USDA)

Farm Service Agency (FSA)

Farm Loan Programs
America’s Lender of First
Opportunity!
 FSA has been involved in
agricultural lending for
more than 70 years!
 FSA offers loan and credit
counseling assistance
to farmers who want to
own and operate their
own farm
America’s Lender of First
Opportunity!
 Individualized farm and
business planning
expertise
America’s Lender of First
Opportunity!
 Loan products tailored to
your farming
operation and needs
 Loans at low interest
rates and extended
terms
America’s Lender of First
Opportunity!
 Individualized decision-
making based on your
situation; not formuladriven lending
America’s Lender of First
Opportunity!
 Partner with wide variety of
resources

Other lenders

Extension Service

Other experts
America’s Lender of First
Opportunity!
 Offer services not available
by any other lender
 FSA uses state-of-the-art
farm planning software
America’s Lender of First
Opportunity!
 Sustained service

We stick with you – even
through tough times
America’s Lender of First
Opportunity!
How do we do it?

Direct and Guaranteed
lending programs



Operating loans (OL)
Farm Ownership loans (FO)
Emergency loans (EM)*
* Direct loan product, only
America’s Lender of First
Opportunity!
Farm Loan Programs

Beginning Farmers

Socially Disadvantaged
applicants (SDA)

General eligibility

Getting started

Resources

Answer questions
America’s Lender of First
Opportunity!
Farm Loan Programs

Direct Loans


Loan applications received and
processed by FSA staff
Guaranteed Loans

Farmers work directly with a lender.
The Lender then makes
arrangements with FSA for a
guarantee.
America’s Lender of First
Opportunity!
Direct Operating Loans (OL)
 Annual operating expenses


Seed, fuel, fertilizer, etc.
Machinery and livestock purchase
Direct Farm Ownership Loans (FO)
 Purchase farm real estate
 Improve real estate property
Emergency Loans (EM)
America’s Lender of First
Opportunity!
Guaranteed Loan Programs


Operating Loans (OL)

Terms Loans and

Lines of Credit
Farm Ownership (FO) Loans
America’s Lender of First
Opportunity!
FSA Loan Limits


Direct loans

OL - $300,000

FO - $300,000

EM - $500,000
Guaranteed loans

$1,112,000 (FY 2010)
America’s Lender of First
Opportunity!
FSA offers lending programs
to a wide variety of farming
operations

Smaller, larger, traditional, nontraditional…

Congressional targeting
America’s Lender of First
Opportunity!
Congressional Targeting

Beginning Farmers

Socially Disadvantaged
Applicants
America’s Lender of First
Opportunity!
Beginning Farmers



Has operated a farm for 10
years or less
Meets requirements of the
program which he/she is
applying
For FO loans, owns acreage of
less than 30% of the median
size farm in the county
FSA does not use age in making this
determination
America’s Lender of First
Opportunity!
Socially Disadvantaged Applicant

Defined by law “one who is a member of a socially
disadvantaged group whose members
have been subjected to racial, ethnic,
or gender prejudice because of their
identity as a member of a group
without regard to their individual
qualities.”
America’s Lender of First
Opportunity!
Socially Disadvantaged Applicant
 For






FLP purposes, *
American Indians or Alaskan Natives
Asians
Blacks or African Americans
Native Hawaiians or other Pacific
Islanders
Hispanics
women
* Other FSA programs may have different SDA definitions.
America’s Lender of First
Opportunity!
Congressional Targeting

All eligibility / loan feasibility
requirements must be met

Identification in these targeted
groups often allows for easier
access to limited program
funds

Funding targets are set by law
America’s Lender of First
Opportunity!
Congressional Targeting

Down Payment Loan Program

5% - minimum down payment

45% - FSA direct loan (maximum
$225,000)


Reduced interest rate
Balance will come from other
sources (can be guaranteed)
America’s Lender of First
Opportunity!
General Eligibility

Different criteria may apply
depending on loan
programs involved

Operating loans

Farm ownership loans

Emergency loans
America’s Lender of First
Opportunity!
General Eligibility

Need lender referral

US Citizen or legal resident
alien

Acceptable credit history

Owner-operator or tenant
operator
America’s Lender of First
Opportunity!
General Eligibility

Not be delinquent on a federal
debt

Not previously caused the
Agency loss

In all cases, must demonstrate
adequate Management Ability
America’s Lender of First
Opportunity!
Management Ability

Each loan program has slightly
different requirements

Operating Loans


1-year complete production and marketing
cycle (within the past 5 years)
Farm Ownership Loans

3 years complete production and
marketing cycle (within past 10
years)
America’s Lender of First
Opportunity!
Financing start-up operations

Know what you want, but, be
realistic

Write it down

Don’t expect everything – at
least, not all at once

It may take years to accomplish
your goals
America’s Lender of First
Opportunity!
Business Plan

How are you going to get from
here to there?

Short and long term goals?

Plan conservatively

Plan for contingencies

More than theoretical

More than internet research
America’s Lender of First
Opportunity!
Business Plan

Flexible

Have records to support
projections


Have good financial records
Get help from experts
America’s Lender of First
Opportunity!
What is FSA looking for…

Creditworthiness


History is a good indication of the
future
Collateral

Does FSA have enough security to
protect its investment?
America’s Lender of First
Opportunity!
What is FSA looking for…

Capacity


Can the farming operation repay the
loan?
Capital

What is the customers contribution?
America’s Lender of First
Opportunity!
What is FSA looking for…

Conditions

What’s necessary to close the loan?

Hazard insurance, etc.
America’s Lender of First
Opportunity!
Finding FSA Resources

Via the internet …
www.fsa.usda.gov
America’s Lender of First
Opportunity!
Questions
And
Answers??
America’s Lender of First
Opportunity!
Every farming operation is different and impacted differently
by many factors.
The information contained in this presentation is general in
nature and intended to be used as a starting point for
discussion. Regulations change frequently, impacting
the validity and reliability of this information. This
information should not be used as the sole basis of any
decision. A thorough evaluation of your specific farming
operation, situation and available FSA programs and
requirements is necessary in every instance. Please
contact your FSA staff to discuss your individual
circumstances.
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