Each fiscal year Congress allocates the Farm Service Agency loan funds as part of the USDA budget. Congress makes allocations for each loan program: direct operating, direct farm ownership, emergency disaster, guaranteed operating and guaranteed farm ownership.
The FSA national office then allocates loan funds to each state based on a formula used to determine potential loan needs. A major factor in the allocation formula is the number of farmers in each state.
Congress has set targets by reserving loan funds in each loan program for beginning farmers and socially disadvantaged farmers. Congress has defined beginning farmers as those who have not operated a farm for more than 10 years and for a farm ownership loan, does not own farm real estate which does not exceed 30 percent of the median farm acreage in the county.
Congress has defined socially disadvantaged groups, for farm loan program purposes, as being American Indians or Alaskan natives, Asians, African Americans, native Hawaiians or Pacific Islanders, Hispanics and women.
Congress has targeted or reserved 50 percent of the direct operating loan funds and 75 percent of the direct farm ownership loan funds for beginning farmers. These reserves of direct loan funds remain in effect until Sept. 1 each fiscal year.
For the guaranteed loan programs, 40 percent of the operating loan funds and 40 percent of the farm ownership loan funds are reserved for beginning farmers until April 1 each fiscal year.
After the target dates the loan funds can be used for non beginning farmer applications. The percentage of targeted loan funds for socially disadvantaged farmers is based on the state percentage of the total rural population made up of socially disadvantaged groups and the statewide percentage of total farmers who are female.
Operating loan and farm ownership loan funds are reserved until Sept. 1 each fiscal year. There can be situations where FSA has approved a loan request but loan funds are not available.
At the same time loan funds may be available in other reserved categories or other loan programs. Also other states may have loan funds available while Ohio has used up our allocation.
FSA cannot transfer loan funds from one loan category to another until the target dates expire. Also FSA cannot transfer loan funds form one loan program to another loan program such as direct operating to direct farm ownership.
FSA suggests that farmers apply for a loan even when loan funds have run out for a loan program. FSA still accepts, processes, and approves loan applications subject to funding.
Approved loans are held until loan money becomes available. All approved loans are placed on a waiting list by the type of loan and category. Approved loans are funded based on the date the application was received in the FSA office.
Therefore submitting the application earlier helps to set the application’s place in the waiting line for loan funds.
Information on Farm Service Agency loan programs is available at a local FSA office or the FSA website at www.fsa.usda.gov which includes a link to farm loan information.
STAY INFORMED. SIGN UP!
Up-to-date agriculture news in your inbox!