The 2014 Farm Bill made several modifications to the Farm Service Agency farm loan programs. These modifications were implemented as of February 7, 2014 when the President signed the Farm Bill.
The definition of a qualified beginning farmer has been modified. It was based on the median farm size and has been changed to the average farm size owned. A beginning farmer is now defined as “does not own a farm greater than 30 percent of the average sized farm in the county. ”This applies to farm ownership purchase loans before buying farm land.
As an example: Columbiana County, Ohio- the median farm size is 60 acres and 30% is 18 acres while the average farm size is 124 acres and 30% is 37.2 acres. This results in more farm operators qualifying as beginning farmers.
The maximum loan amount for a Direct Down Payment Farm Ownership loans have been increased from $225,000 to $300,000. Direct Down Payment Farm Ownership loans are for beginning farmers and socially disadvantaged farmers to purchase farm real estate. The applicant must have 5% down; FSA loans 45% of the purchase up to $300,000; and another lender loans the remaining 50% of the purchase.
The interest rate charged on Direct Farm Ownership Joint Financing loans made with another lender is now set at 2% below the regular Direct Farm Ownership loan rate with a minimum of 2.5%. The other lender (Farm Credit, bank, etc.) must loan at least 50% of the total amount borrowed. The goal is to encourage joint financing and thereby stretch the FSA direct farm ownership loan dollars.
Limited resource interest rates are now available to beginning and veteran farmers who receive a microloan. Borrowers will be given a choice between the limited resource interest rate or the regular operating loan interest rate. Currently the regular operating loan is lower than the set limited resource rate but this may not always be.
Microloans made to beginning and veteran farmers are to be exempt from the direct loan term limitations. Term limits will still apply for non-microloan direct loans such as regular operating loans and farm ownership loans. Presently applicants are eligible to close direct operating loans in 7 calendar years and a beginning farmer’s eligibility is limited to a maximum of 10 years.
The definition of a “veteran farmer” has been established as: a farmer who has served in the Armed Forces (as defined in section 101(10) of title 38 United States Code) and who (a) has not operated a farm, or (b) has operated a farm for not more than 10 years.
The percentage of guarantee for Conservation Loans will increase to 80% for non-beginning farmers.
For beginning farmers and socially disadvantaged farmers the guarantee percentage for Conservation loans will increase to 90%. Guaranteed Conservation loans can be used for installation of conservation structures to address soil, water, and related resources; installation of water conservation measures; and the establishment or improvement of permanent pasture.
Previously applicants could not receive Guaranteed Operating loans for more than 15 calendar years. This term limit has now been eliminated.
Previously Rural Youth loans were limited to rural areas or towns with populations of less than 50,000. This rural restriction has now been removed and youth loans are now available to all regardless of the population where they reside. The goal is to open the program up to urban youth who are interested in agricultural projects such as urban gardens. The biggest FFA Chapter in the US is located in Philadelphia, Pennsylvania.
Additional information on FSA Farm Loans can be found by visiting a nearby FSA Service Center or online at fsa.usda.gov.