The motto for the Boy Scouts is ‘Be Prepared.’ Are you prepared for your 2009 harvest? Will your corn be singing, “Oh, give me a home!” Have you considered applying for a Farm Storage Facility Loan through your local FSA office but were waiting on the ‘new’ changes?
Well, guess what? The changes are here! The Food, Conservation and Energy Act of 2008 provided for changes to the Farm Storage Facility Loan Program. On Aug. 17, these new regulations were finally put in place and are ready for implementation.
There are several new provisions to the Facility Loan Program. I am going to briefly cover the major changes. If you have additional questions, call your local FSA office.
ELIGIBLE COMMODITIES: There are some new additions to eligible commodities. Hay, renewable biomass, fruits and vegetables — cold storage facilities have been added to the list. Small grains, corn, soybeans, minor oilseeds and pulse crops are still eligible commodities.
STORAGE NEED: For the new commodities hay and renewable biomass commodities, we will determine the total storage capacity needed on production for two years. For cold storage facilities for fruits and vegetables we will determine the total storage capacity needed on production for one year. We will still use two years of storage capacity for small grains, corn, soybeans, minor oilseeds and pulse crops.
STRUCTURES: The program collateral must be used for the purpose, for which the storage facility was erected, constructed, assembled or installed for the entire term of the loan. The facility is still prohibited from being used as a commercial facility or operation as long as the Farm Storage Facility Loan is outstanding. For specifics on what facilities or equipment are eligible for loans, check with your local FSA office.
LOAN AMOUNTS: Old rules provided for an aggregate outstanding balance of all facility loans for a borrower to not exceed $100,000. New provisions permit up to $500,000 per loan request.
LOAN TERMS: Farm Storage Facility Loan terms are 7, 10 or 12 years with the term determined by the total Farm Storage Facility Loan principal and the borrower. The options available to the producer include if the loan is:
$100,000 or less the term is 7 years only.
$100,000.01 to $250,000 the borrower can specify 7 or 10 years.
$250,000.01 to $500,000 the borrower can specify 7, 10 or 12 years.
INTEREST RATES: Various interest rates will be announced every month and are based on the term chosen for the loan. The interest rate in effect for the month of approval will be effective for the entire term of the loan.
PARTIAL DISBURSEMENTS: Borrowers may request one partial disbursement when a portion of the construction has been completed. The disbursement will be commensurate with the amount of construction completed. The maximum amount will be 50 percent of the projected and approved total Farm Storage Facility Loan amount.
FSFL APPLICATION FEE: The nonrefundable application fee for each Farm Storage Facility Loan is $100 per borrower.
INSURANCE REQUIREMENTS: Multi peril crop insurance or coverage through the Non Insured Assistance Program is required on all commodities stored in the Farm Storage Facility Loan funded facility whether economically significant or not. This coverage must be maintained through the life of the loan.
I have hit on a few highlights and I am sure you have lots of questions. Contact your local FSA office for the answers and maybe even an application.
That’s all for now,