The FSA offers a variety of farm loans for family-sized farmers and ranchers. These flexible guideline programs help more people become farmers. The programs are great for beginning farmers, as well as minority farmers and those looking to expand existing farm operations.
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If you aren’t able to secure financing for your farm elsewhere, you can get financing from the FSA. The loan programs that they offer are meant as temporary financing. Think of it as a bridge to get you to be able to qualify for commercial financing in the future.
Keep reading to learn the type of farm loans that are available today.
Farm Operating Loans
If you are looking for a loan to help your
farm’s operations, the FSA has an option for you. The Direct Farm Operating Loan helps you get your farm up and running. It helps with the costs of reorganizing your farm, purchasing equipment or livestock, covering the operating expenses, making repairs to an existing farm, or refinancing current farm debts.
In order to get the
Direct Farm Operating Loan, you apply directly through the FSA. You can borrow up to $300,000 and don’t need a down payment. The term can vary between 12 months and 7 years and you must have an acceptable payment history with other vendors. You must be unable to secure financing with any other entity and not have any defaulted federal debts.
Farm Ownership Loans
If you are looking to buy a farm or expand an existing farm, you may do so with the
Farm Ownership Loan Program. You have three options for this loan program – regular, joint financing, and down payment loans.
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The ‘regular’ or ‘joint financing’ loan provides up to 50% of the cost of the farm from the FSA. The remaining funds come from another lender or even the farm seller. The ‘Down Payment Program’ is only for beginning or minority farmers, though.
For the regular or joint loan, you can borrow up to $300,000, but for the down payment program, you can borrow up to 45% of the farm’s purchase price. You also need to put in at least 5% of your own funds. You can obtain the remaining funds from any available loan program.
The term for the ownership loans is up to 40 years. The down payment loan has a maximum term of 20 years. In order to qualify, you must be a farmer, have decent credit, and be unable to secure financing elsewhere.
These programs are for farmers in a niche industry. Think of CSA farmers, farmers for restaurants, or hydroponic farmers. There are both ownership and farm operating micro loan programs.
You can borrow up to $50,000 for this loan program. The Direct Ownership loan has a maximum term of 25 years and the Direct Operating loan can have a term between 12 months and 7 years. In order to qualify, you’ll need to prove that you have farm experience of at least 3 years for the Farm Ownership program. For the Direct Operating loan, you need experience, but it doesn’t have to be on the farm – it can be small business or agriculture experience.
Guaranteed Farm Loans
The FSA guaranteed loans are provided by USDA approved banks. You don’t go through the FSA, but rather a bank to apply for the loan. The bank does all of the work including underwriting and funding your loan. The guaranteed loans include ownership loans, operating loans, and a land contract guarantee.
You can borrow up to $1,750,000,000 and can qualify with good credit and the inability to secure financing any other way. The terms of the loans vary between 7 years and 40 years, depending on the reason for the loan.
find a lender through the FSA website.
The FSA offers a variety of options for farmers to help you get started, expand, and operate. Explore all of your options to help you get the farm loan that you need.
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