Financing Opportunities for Beginner Ranchers

The USDA’s Farm Service Agency provides wide-ranging programs that cater to their diverse audience’s needs. This includes beginning ranchers who sees profit possibilities in the endeavor. Under the FSA’s “Beginning Farmer” direct and guaranteed loan programs are loans that provide access to land and capital (farm ownership loans), continuance of operation (operating loans), and as funding support during their startup years (microloans).

One particular area of focus which the agency especially gives attention to is supporting farmers and ranchers alike who are within their first 10 years of operation.

Who are beginner farmers/ranchers?

These entrepreneurs can be defined as those who have not been in the business for more than a decade, do not own more than 30 percent of the farm or ranch’s average size, meet the eligibility requirements of the program they are applying for, and who substantially participates in the operation of the farm or ranch business.

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What are the beginner farmer requirements?

As has been stated, the beginner farmer or rancher must not own more than 30 percent of the farm or ranch’s average size. So if the farm is 140 acres large, the farmer or rancher, in order to qualify under the FSA’s Beginner Farmer program, should not own more than 42 acres of the land in question by the time your application for the program is submitted.

If, in the case that the land to purchase crosses counties, the average farm or ranch size to be used will be that where the applicant lives. If the applicant’s residence is not within the farm or ranch, the data to be used will be from the county where most of the farm of ranch is located.

These rules don’t apply to applicants who are members of historically underserved groups or women farmers.

What is a Down Payment Loan?

The Down Payment loan program is offered under the Direct Farm Ownership Program. This loan option helps beginner farmers or ranchers purchase a farm or ranch land. Though it does not offer full financing unlike the program’s Joint Financing program, it still only asks the borrower to contribute at least 5 percent in down payment. The agency will shoulder the 45 percent (until a maximum of $300,000), and the remaining balance will be financed by a commercial lender, by a private lender, a cooperative, or the seller.

Types of loan programs

Under the direct and guaranteed loan programs, the FSA offers:

  1. a) Farm Ownership loans
  2. b) Farm Operating loans
  3. c) Land Contract Guarantee loans
  4. d) Conservation loans

Under the Farm Ownership banner, there are the:

  1. a) Joint Financing loan
  2. b) Down Payment loan

If you need more information on the programs, feel free to contact the USDA information and service center in your corresponding areas.

*The Farm Service Agency operates under the United States Department of Agriculture. Please access the FSA website for USDA news and current information on interest rates, access application forms, receive online assistance, and get updates on the new programs offered by the agriculture department.

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