The Farm Service Agency has loan programs to assist members of socially disadvantaged groups and beginning farmers to finance agricultural enterprises. Under these designated farm loan programs, FSA can provide financing to eligible applicants through either direct or guaranteed loans.
While all qualified producers are eligible to apply for these loan programs, FSA has targeted funding each fiscal year for socially disadvantaged farmers and beginning farmers.
For FSA farm loan programs socially disadvantaged persons are defined as women, African American, American Indian, Alaskan Native, Hispanic, Asian American, and Pacific Islander farmers.
Beginning farmers are defined as someone who has not operated a farm for more than 10 years, substantially participates in a farm operation and meets the eligibility requirements of the loan program they are applying for.
For farm ownership loans, a beginning farmer cannot own a farm greater that 30 percent of the median sized farm in the county (this is before applying for the loan).
Down payment help
FSA has a special down payment farm ownership loan to assist beginning farmers and socially disadvantaged farmers in purchasing a farm. Retiring farmers may use this program to assist in transferring their land to future generations.
The down payment farm ownership loan requires that the applicant have a cash down payment of at least 5 percent; the FSA loan cannot exceed 45 percent of the purchase with a maximum loan of $225,000; and the balance is financed by a commercial lender or a private party such as the seller.
To qualify for the down payment farm ownership loan assistance, the loan applicant must meet all of the regular loan eligibility requirements. Note: all applicants for direct farm ownership loans must have participated in the business operation of a farm for at least three years.
FSA is working with guaranteed lenders, such as Farm Credit and commercial banks, to assist socially disadvantaged farmers and beginning farmers with guaranteed operating and farm ownership loans.
Guaranteed operating loans can be used for operating expenses, livestock purchases, equipment purchases and to refinance operating debts. Guaranteed farm ownership loans can be used to purchase farmland, make real estate improvements, and refinance farm debts.
As of Oct. 1, 2012, the guaranteed loan limit has been increased to $1,302,000.
Additionally FSA targets loan funds to assist beginning farmers and socially disadvantaged applicants in other loan programs, such as:
• Direct operating microloans for operating expenses and capital purchases with a maximum loan limitation of $35,000. This loan program has reduced the application paperwork process.
• Direct operating loans for operating expenses, livestock purchases, and farm equipment purchases with the maximum loan limitation of $300,000.
• Direct farm ownership loans for purchasing real estate and improving facilities with a maximum loan limitation of $300,000.
Additional information on Farm Service Agency farm loan programs can be obtained by contacting your local FSA office, or the farm loan team serving your county, or the FSA web site at www.fsa.usda.gov and clicking on “Farm Loans.”