By providing access to credit, FSA s Farm Loan Programs offer opportunities to:

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2 By providing access to credit, FSA s Farm Loan Programs offer opportunities to: Start, improve, expand, transition, market, and strengthen family farming and ranching operations. Provide viable farming opportunities for: Beginning Farmers Minority Farmers and Women Producers. Value-added, direct sale, organic, and specialty crop operations. Young people actively involved in agricultural youth organizations.

3 Direct Loans FSA makes and services direct loans and provides supervised credit Funds come from the U.S. Treasury Guaranteed Loans The lender makes and services the loan FSA guarantees loans made by conventional lenders for up to 95 percent of any loss (typically 90%)

4 Loan Program Delivery Direct loan requests are processed and serviced in local offices Guaranteed requests are completed by the lender and producer, and submitted to FSA for processing Upon request, FSA staff will assist applicants in completing paperwork

5 Types of Farm Loan Programs Farm Ownership (FO) Loans (Direct and Guaranteed) Farm Operating (OL) Loans (Direct and Guaranteed) Emergency (EM) Loans (Direct only) Land Contract (Guaranteed only) Conservation Loans (Guaranteed only)

6 Loan Limitations Direct FO - $ 300,000 Microloan - $ 50,000 Direct OL - $ 300,000 Microloan - $ 50,000 Youth - $ 5,000 Guaranteed FO or OL, or combined D-FO and G-FO, or combined D- OL and G-OL: $1,399,000 for FY 2017 (changes annually based on rate of inflation) EM - $ 500,000 (or amount of loss, whichever is lower)

7 General Eligibility Requirements Direct and Guaranteed applicants must: Be unable to obtain sufficient credit elsewhere without FSA assistance Be a citizen or a legal resident alien Possess legal capacity to incur the loan obligation Have acceptable credit history Be the owner-operator or tenant-operator of a family farm after the loan is closed

8 General Eligibility Requirements Continued Direct and Guaranteed applicants must: Not be delinquent on federal debt Not have outstanding unpaid judgments Not have caused the agency a loss by receiving debt forgiveness (some exceptions) Not have been convicted of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last five years

9 FSA Direct Loans Direct loan applicants must also: Have applicable education, training, or farm experience that provides reasonable prospects of success (For an FO loan, must have participated in the business operations of a farm or ranch for at least 3 years out of the past 10 years may substitute 1 of these 3 yrs. with post-secondary education in an ag-related field, significant business mgmt. experience, or military leadership experience.)

10 FSA Direct Loans (cont d) Direct loan applicants must also: Develop a realistic Farm Business Plan that projects repayment ability for the loan Provide adequate collateral for the loan Agree to take borrower training courses and graduate to private sector credit when able to do so Not exceed restriction on years of eligibility

11 FSA Direct Loans Continued Corporations, cooperatives, joint operations, trusts and partnerships may be eligible: their members/stockholders must meet the program eligibility requirements the entity must also be authorized to operate a farm in the State where the farm is located

12 Direct Loan Making: Operating Loans Purposes: Purchase Equipment Purchase Livestock Production Expenses Refinance Operating Expenses Loan Closing & Related Expenses OL loans are repaid in 1 to 7 years (term is dependent on cash flow and useful life of security)

13 Direct Loan Making: Microloans (ML) Microloans are FO or OL (annual or term) that do not exceed $50,000. Microloans have a simplified application process; with paperwork and verification requirements that are more proportional to smaller loans and operations. Alternative managerial requirements for ML-OL may be acceptable. ML-FO still requires 3 years farm experience in the last 10 years.

14 Direct Loan Making: Farm Ownership Loans FO loan repayments can be scheduled for up to 40 years (term is dependent on cash flow and useful life of security) Loan Purposes: Purchase Land Make Capital Improvements Promote Soil and Water Conservation Loan Closing and Related Expenses Note: Direct loans cannot be used to refinance real estate.

15 Direct Loan Making Farm Ownership Downpayment Loans Applicants must: Be Beginning Farmers (farming 10 yrs or less) or Targeted Underserved/SDA (minority groups and/or women historically underserved by the program) Provide a minimum 5% cash downpayment (total financing by FSA and all other lenders cannot exceed 95%) Downpayment loans will not exceed 45% of the lesser of: The purchase price The appraised value of farm to be purchased, or $667,000 (maximum loan of $300,000)

16 Direct Loan Making Farm Ownership Downpayment Loans Continued Maximum FSA term is 20 years Interest rate is 4% below regular direct FO rate, but no less than 1.5% FSA can guarantee the balance, with a term of no less than 30 years and no balloon payment due in the first 20 years No guarantee fee will be charged There is no limit on the purchase price of the property

17 Direct Loan Making Farm Ownership Joint Financing Loans FSA encourages using joint financing arrangements where an applicant obtains financing from another lender, which can be a commercial lender, a State program, or the seller of a farm. The applicant will use this financing along with FSA financing for any authorized FO purposes. If FO is part of a joint financing arrangement and the amount of FSA s loan does not exceed 50% of the total amount financed, the interest rate charged by FSA will be the greater of the following: - Current Direct FO interest rate minus 2% - 2.5%

18 Direct Loan Making Emergency Loans Used for real estate and operating purposes where a disaster or quarantine has been declared. Purposes: Refinance debts Repair/replace farm property Buildings Machinery/Livestock Feed Other items

19 Application Tips A good farm business plan is critical Applicants should: Set short and long term goals Plan conservatively Have records to support production projections Have good financial records Get help from experts (Extension, State Programs, etc.)

20 Application Tips Applicants may ask FSA employees for help to complete the paperwork Other sources of free assistance: Extension Service USDA Outreach Grant Recipient Organizations

21 Direct Loan Making Applications Applications for direct loan assistance may be submitted to the FSA local office serving the area where the operation is located. Application forms are available from FSA offices. Applications, other forms, & office locations are available online at: Local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture, Farm Service Agency No one can be denied an application or other forms

22 Guaranteed Loans Guaranteed loans are: Made and serviced by local agricultural lenders Funded by the lender Used by lenders to assist producers who don t meet normal underwriting standards.

23 Guaranteed Loan Making Eligibility To qualify for an FSA Guarantee, a loan applicant must: Meet the general eligibility requirements Be unable to obtain a loan without a guarantee Have a feasible plan and adequate collateral as determined by the lender Apply to a commercial lender who participates in the Guaranteed Loan Program

24 Types of FSA Guaranteed Farm Loans Farm Ownership (FO) Loans Farm Operating (OL) Loans Operating Lines of Credit Land Contract Conservation Loans

25 Guaranteed Loan Making The interest rate a lender charges: must not exceed what that lender would normally charge its average farm customer can be fixed or variable

26 General Info: Program Funding Loan programs are funded by annual Congressional Appropriations Appropriation levels may fall short of demand, especially direct farm ownership loans Loan funds are allocated to states There are separate allocations for targeted underserved farmers and ranchers and beginning farmer targeted funds

27 General Info: Targeted Underserved Applicant As defined by law, a targeted underserved applicant is one who is a member of an underserved 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. Targeted underserved groups are African Americans, American Indians, Alaskan Natives, Hispanics, Asians, Pacific Islanders, and Women.

28 General Info: Targeted Underserved Applicants FSA does not have a specific targeted underserved applicant loan program, but rather targets funds in existing programs to applicants that meet the definition The targets are set by law Targeted underserved loan applicants must meet loan program requirements

29 General Info: Beginning Farmer Loans FSA provides direct and guaranteed loans to beginning farmers and ranchers FSA targets a portion of its direct and guaranteed FO and OL funds to beginning farmers

30 General Info: Beginning Farmer Loans A beginning farmer or rancher is an individual or entity who: (1) has not operated a farm or ranch for more than 10 years (2) meets the loan eligibility requirements of the program to which he/she is applying (3) for an FO loan, does not own a farm greater than 30 percent of the average size farm in the county

31 For More Information: Contact your local FSA Office Visit the FSA Website: ww.fsa.usda.gov Additional Information: services/farm-loan-programs/index