The US government acknowledges the role and importance of farms and farmers in the sustainability and progress of the nation. With this in mind, the federal government aims to assist farmers and ranchers in the needs to continue and further their operations.
The United States Department of Agriculture (USDA) supports farmers and ranchers in many ways imaginable. One of its efforts to provide assistance is the coming up with farming loans to cover the various needs of the farming business.
The Department’s agency that is dedicated farmers and their communities is the Farm Service Administration (FSA). Not only does the FSA focus on the education and research, it also ensures the safe consumption of meat and poultry, and land and water conservation. Farm loans are also processed and serviced through this agency. A portion of the USDA budget is used to fund the farming loan products of this agency.
Financing Farming Potential Through Farm Loans
A wide array of farming loans is available for farmers to explore. From federally-backed loans to commercial ones, there are different types to cover the different needs in running a farm or creating one.
Direct Farm Loans Program
Farmers can get 100 percent financing from the FSA. The loan is funded, serviced and owned by the agency. There are different direct loans which can be used to purchase new farms, expand presently-operating ones, improvements and repairs of existing structures and cover operation expenses among others.
The Direct Farm Ownership Loan is used to purchase land and farm. There are three types for farming loans under the direct ownership loan: regular, down payment and joint financing. The advantage of this loan is it has no requirements for previous or current farm ownership. There is also the Direct Farm Operating Loan. It is intended to cover the cost of farm operations. Like the ownership loan, this loan of provided by the FSA with 100 percent financing.
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Guaranteed Farm Loan Program
Unlike the direct loans where the originator is FSA itself, Guaranteed Farm Loans are backed by the agency. The provider of funds and the one who services it would be the private lender or bank.
The guarantee lessens the risk for lenders so that borrowers may be able to take advantage of competitive prices. The guaranteed loans also come in two types, Farm Ownership and Farm Operation. Each loan type can be used in the same as their direct farm loan counterparts.
From smaller financing, there is the EZ loan. It is a guaranteed loan with a cap of $100,000. It is designed for farmers who are looking for smaller farming loans. The application process is also streamlined to make it easier for farmer borrowers.
For non-traditional and niche farmers, there’s the microloan program of the
FSA. It can also be used for farm ownership or farm operating. The microloan is funded and owned by the agency. Farmers and ranchers can borrow up to $50,000 with no minimum borrowing amount. It can be also be used by alternative farmers who are involved in vertical or urban gardening and the like.
These are a few of the amazing loan products offered by the FSA. Large or small, farm or ranch, the USDA may be able to help farmers get access to capital. Aside from these government loans, there are also commercial banks and lending institutions that specialize in
farming loans. Discovering more options will help you find the right financing that you need for your farming venture.
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