Becoming an FSA
Guaranteed Lender
An Overview of the USDA Farm Service Agency
Farm Loan Programs
Welcome to Our Webinar
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Farm Service Agency
Farm Loan Programs
http://fsa.usda.gov/FSA/
1400 Independence Ave, SW
Washington, DC
202-720-3889
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Farm Service Agency
Farm Loan Programs
Chris Beyerhelm
Deputy Administrator
for Farm Loan Programs
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Farm Loan Programs
Guaranteed Loan Making
Randi Sheffer
Branch Chief
Trent Rogers
Senior Loan Officer
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Farm Loan Programs
Guaranteed Loan Servicing
Jeff King
Branch Chief
Theresa Null
Senior Loan Officer
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California FarmLink
Certified CDFI
Reggie Knox
Executive Director
Santa Cruz, CA
CA FarmLink provides small loans to farmers for
annual operating costs, equipment and
infrastructure.
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Farm Service Agency
FSA provides assistance to farmers through
many programs:
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Farm Programs:
• Production, Emergencies & Compliance
• Price Support
• Conservation & Environmental Programs
• Disaster Programs
Farm Loan Programs:
• Direct Loans
• Guaranteed Loans
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Types of Loans
Direct Loans
• Applicant applies directly to one of the USDA-FSA Service Centers
located across the country
• Loan limits may be made up to $300,000
Guaranteed Loans
• Applicant applies to an agricultural lender, who then applies to FSA for
the guarantee
• Guaranteed Loan limits may be made up to $1,355,000 (adjusted
annually)
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Benefits of a Guaranteed Loan
Provides an “Insurance Policy” for
production agricultural loans
◦ FSA reimburses the lender up to 95% of the
principal and interest lost when a borrower
can not pay back the loan
◦ Mitigates risk when lending to borrowers who
do not meet commercial lender underwriting
standards
◦ Less risk means lower interests for your
borrowers
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Benefits
Turns a loan into a marketable security
◦ Guaranteed portion of loan can be sold on
the secondary market
◦ Provides capital that can build portfolio
◦ Provides source of capital through servicing
fees
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Benefits
Using guaranteed & direct farm ownership
programs together
◦ Downpayment Program (SDA/BF)
 5% down payment provided by borrower
 Up to $300,000 financed by FSA directly
 Balance financed by lender
◦ Participation
 If FSA provides ≤ 50%, special interest rates apply
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Benefits

Gain experience underwriting agricultural
loans
◦ FSA will help you through the underwriting
process
◦ FSA provides annual lender training
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Purposes
Farm Ownership (FO) Direct & Guaranteed
Use of Proceeds
 Purchase farm
 Construct buildings or other capital improvements
 Soil and water conservation
 Pay closing cost
 Refinance debt incurred for FO purposes (Guaranteed only)
Interest Rates-Fees
 Direct: varies, based on Government’s borrowing cost
(currently 4%)
 Guaranteed: determined by lender
 1.5% Guaranteed Fee
Terms
 up to 40 year
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Purposes
Farm Operating (OL)(LOC) Direct & Guaranteed
Use of Proceeds
• Purchase livestock, machinery and equipment
• Pay annual operating and/or family living expenses
• Refinance operating debt
• Pay closing cost
• Payment of non-delinquent payments on term debts (OL/FO)
Interest Rates-Fees
• Direct: varies, based on Government’s borrowing cost (currently
2.25%)
• Guaranteed: determined by lender
• 1.5% Guaranteed Fee
Terms
• up to 7 year
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Eligibility Requirements
Standard Eligible Lender (SEL)



SEL is basic level of participation in the FSA
Guaranteed Loan Program
Lender must have experience in making and servicing
agricultural loans (or work with an experienced
packager)
Lender must maintain an office near enough to the
collateral’s location for proper servicing
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Becoming a SEL
CDFI’s requesting SEL approval will need to
provide:
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•
•
•
Cover letter requesting SEL status
Copy of year-end financial statement and agriculture performance
history for past 2 years
Schedule of current sources of funding and funds available for
agriculture lending
Current loan loss reserve
Requests are submitted to the National Office through the State
Executive Director for the State where the CDFI is located.
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Application Process
SELs submit the following to FSA:
• Application form
• Loan narrative
• Balance sheet
• Cash flow budget
• Description of farmed land
• Credit report
• Environmental information (if needed)
• Verification of income/debts
• Financial/production history
FSA will:
• Make determination, approve and obligate loan request
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Questions
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Guaranteed Loan Servicing
Guaranteed against loss as long as:

Serviced according to standard Ag Lending practices and
standards, and

The requirements of the lenders agreement and the
guarantee are met.
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General Servicing
Lender Responsibilities:

Apply standard agricultural loan servicing principals to
guaranteed loans:
Accounting for loan proceeds
Monitoring collateral and tracking the sale of
collateral
Maintain regular contact with the borrower

Servicing a guaranteed loan is no different than servicing
a non-guaranteed loan.
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Reporting
Guaranteed Loan Status reports as of March 31 and
September 30 of each year.
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Servicing Tools
FSA works with lenders to help assure that every
borrower has the opportunity to be a successful farmer
or rancher. The guarantee provides servicing flexibility
that results in favorable terms for:
 Rescheduling
 Deferral
 Debt Writedown
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Other Servicing Tools
Servicing tools that are also available to assist
borrowers with options to improve cash flow or
help to ensure the success of the farming or
ranching operation include:
Subordinations
 Partial Releases
 Interest Rate Adjustments
 Debt Consolidation

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Default Servicing
Loans are in default when 30 days past due on a
payment or in violation of provisions of the loan
documents.
Default status reports are required for delinquent
loans every 60 days until the default is resolved or
loss claim submitted.
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Loss Claims
Must be supported by documentation that lender has
serviced the loan as required.
Example:
 Accounting for use of proceeds
 Accounting for all security
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FSA Website: http://fsa.usda.gov/FSA/
 Sign-up for FSA electronic notifications
 Download Fact Sheets for FSA Programs
 Locate FSA State and County Service Center Office
(FSA staff and phone number)
CDFI’s can also contact:
 FSA State Office
 Local USDA-FSA Service Center
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Questions
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