USDA Farm Loan Program
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Transcript USDA Farm Loan Program
USDA - Farm Service Agency
Farm Loan Programs
America’s Lender of First Opportunity!
America’s Lender of First
Opportunity!
United States Department of
Agriculture (USDA)
Farm Service Agency (FSA)
Farm Loan Programs
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Opportunity!
FSA has been involved in
agricultural lending for
more than 70 years!
FSA offers loan and credit
counseling assistance
to farmers who want to
own and operate their
own farm
America’s Lender of First
Opportunity!
Individualized farm and
business planning
expertise
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Opportunity!
Loan products tailored to
your farming
operation and needs
Loans at low interest
rates and extended
terms
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Opportunity!
Individualized decision-
making based on your
situation; not formuladriven lending
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Opportunity!
Partner with wide variety of
resources
Other lenders
Extension Service
Other experts
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Opportunity!
Offer services not available
by any other lender
FSA uses state-of-the-art
farm planning software
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Opportunity!
Sustained service
We stick with you – even
through tough times
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How do we do it?
Direct and Guaranteed
lending programs
Operating loans (OL)
Farm Ownership loans (FO)
Emergency loans (EM)*
* Direct loan product, only
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Farm Loan Programs
Beginning Farmers
Socially Disadvantaged
applicants (SDA)
General eligibility
Getting started
Resources
Answer questions
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Farm Loan Programs
Direct Loans
Loan applications received and
processed by FSA staff
Guaranteed Loans
Farmers work directly with a lender.
The Lender then makes
arrangements with FSA for a
guarantee.
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Direct Operating Loans (OL)
Annual operating expenses
Seed, fuel, fertilizer, etc.
Machinery and livestock purchase
Direct Farm Ownership Loans (FO)
Purchase farm real estate
Improve real estate property
Emergency Loans (EM)
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Guaranteed Loan Programs
Operating Loans (OL)
Terms Loans and
Lines of Credit
Farm Ownership (FO) Loans
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FSA Loan Limits
Direct loans
OL - $300,000
FO - $300,000
EM - $500,000
Guaranteed loans
$1,112,000 (FY 2010)
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FSA offers lending programs
to a wide variety of farming
operations
Smaller, larger, traditional, nontraditional…
Congressional targeting
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Congressional Targeting
Beginning Farmers
Socially Disadvantaged
Applicants
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Beginning Farmers
Has operated a farm for 10
years or less
Meets requirements of the
program which he/she is
applying
For FO loans, owns acreage of
less than 30% of the median
size farm in the county
FSA does not use age in making this
determination
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Opportunity!
Socially Disadvantaged Applicant
Defined by law “one who is a member of a socially
disadvantaged 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.”
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Socially Disadvantaged Applicant
For
FLP purposes, *
American Indians or Alaskan Natives
Asians
Blacks or African Americans
Native Hawaiians or other Pacific
Islanders
Hispanics
women
* Other FSA programs may have different SDA definitions.
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Congressional Targeting
All eligibility / loan feasibility
requirements must be met
Identification in these targeted
groups often allows for easier
access to limited program
funds
Funding targets are set by law
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Congressional Targeting
Down Payment Loan Program
5% - minimum down payment
45% - FSA direct loan (maximum
$225,000)
Reduced interest rate
Balance will come from other
sources (can be guaranteed)
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General Eligibility
Different criteria may apply
depending on loan
programs involved
Operating loans
Farm ownership loans
Emergency loans
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General Eligibility
Need lender referral
US Citizen or legal resident
alien
Acceptable credit history
Owner-operator or tenant
operator
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General Eligibility
Not be delinquent on a federal
debt
Not previously caused the
Agency loss
In all cases, must demonstrate
adequate Management Ability
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Management Ability
Each loan program has slightly
different requirements
Operating Loans
1-year complete production and marketing
cycle (within the past 5 years)
Farm Ownership Loans
3 years complete production and
marketing cycle (within past 10
years)
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Financing start-up operations
Know what you want, but, be
realistic
Write it down
Don’t expect everything – at
least, not all at once
It may take years to accomplish
your goals
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Business Plan
How are you going to get from
here to there?
Short and long term goals?
Plan conservatively
Plan for contingencies
More than theoretical
More than internet research
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Business Plan
Flexible
Have records to support
projections
Have good financial records
Get help from experts
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What is FSA looking for…
Creditworthiness
History is a good indication of the
future
Collateral
Does FSA have enough security to
protect its investment?
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What is FSA looking for…
Capacity
Can the farming operation repay the
loan?
Capital
What is the customers contribution?
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What is FSA looking for…
Conditions
What’s necessary to close the loan?
Hazard insurance, etc.
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Finding FSA Resources
Via the internet …
www.fsa.usda.gov
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Questions
And
Answers??
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Every farming operation is different and impacted differently
by many factors.
The information contained in this presentation is general in
nature and intended to be used as a starting point for
discussion. Regulations change frequently, impacting
the validity and reliability of this information. This
information should not be used as the sole basis of any
decision. A thorough evaluation of your specific farming
operation, situation and available FSA programs and
requirements is necessary in every instance. Please
contact your FSA staff to discuss your individual
circumstances.