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An Introduction to FSA Farm Loans Farmers apply for direct loans at local FSA offices Guaranteed loans may be available from commercial lenders who apply for loan guarantees from FSA. All programs are administered through local

  2. An Introduction to FSA Farm Loans  Farmers apply for direct loans at local FSA offices  Guaranteed loans may be available from commercial lenders who apply for loan guarantees from FSA.  All programs are administered through local offices.

  3. An Introduction to FSA Farm Loans The goal of FSA’s Farm Loan Programs is to graduate its borrowers to commercial credit. Once a farmer is able to obtain credit from the commercial lending sector, the agency’s mission of providing temporary, supervised credit is complete.

  4. FSA Farm Loans: Lender of First Opportunity Who We Help We energetically target groups such as: Beginning farmers Historically underserved farmers (women & minorities) Veterans We look outward and also help: Farmers who have commercial credit but have hit hard times and now require a safety net Value-added farming operations Organic and specialty farmers

  5. What Type of Loans are Available Direct Loan Program: Farm ownership, operating, and emergency loans Guaranteed Loan Program: Farm ownership, operating, and conservation loans are available Land Contract Guarantee Program: FSA offers two types of guarantees

  6. FSA Farm Loans: Lender of First Opportunity FSA Has Two Types of Loans. 1. Direct Loans Producer unable to get conventional credit directly or through a FSA guarantee loan FSA loan officer works directly with producer Comprehensive financial planning services Repayment terms tailored to operation income flow. Low interest and extended repayment Real Estate, Operating and Microloans

  7. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans – Real Estate. Real Estate/Regular Farm Ownership - 100%. Purchase farms/farmland, construction projects, or repairs No cash down payment required Repayment up to 40 years. Maximum of $300,000 Minimum collateral; 100-150% of loan 3 years management experience in past 10 years. Post-secondary education; farm apprenticeship; leadership or management experience from military or extension service may count towards one year. FSA Maximum Loan $300,000 Int. Rate 3.75% Terms 20-30 years 1 st lien on farm and possibly Collateral required other property

  8. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans – Real Estate. Joint Financing Farm Ownership - 50/50 Purchase farm property and/or farm land, construction or improvements Open to beginning and non-beginning farmers No down payment required FSA Lender or Land Contract 50% 50% % of Purchase Financed up to $300,000 Int. Rate 2.50% Lender Rate Terms 20-40 years Lender Terms 2 nd lien on farm and 1 st lien on farm Collateral required possibly other property

  9. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans – Real Estate. Joint Financing - 50/50 - Example $700,000 Farm Purchase $400,000 Lender / Land Contract 1 st $300,000 FSA 2 nd mtg -- 2.5% 20-40 yrs.

  10. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans – Real Estate. Down Payment - 5/45/50 Used to purchase farms and land 5% down payment required Open only to beginning farmers & underserved Farmer FSA Lender or Land Contract % of Purchase Financed 5% 45% 50% up to $300,000 Int. Rate 1.50% Lender Rate Terms 20 years 30 years 2 nd lien on farm 1 st lien on farm Collateral required

  11. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans – Real Estate. Down Payment - 5/45/50 - Example $500,000 Farm Purchase 25,000 Cash down payment $250,000 Lender / Land Contract 1 st $225,000 FSA 2 nd mtg -- 1.5% 20 yrs.

  12. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans. Operating Loans: Buy livestock, equipment, crop inputs, feed, expenses, refinance farm operating debts, minor infrastructure improvements Low, fixed interest rate At least 1- year’s experience in past 5 years Repayment terms tailored to your operation; 1 – 7 years Maximum of $300,000 Minimum collateral: 100-150% of loan

  13. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans. Microloans  Better serve the unique financial operating needs of beginning, niche and the smallest of family farm operations  Examples might include ; direct marketing to restaurants and grocery stores, organic production, community supported agriculture (CSA’s) and farmers markets

  14. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans. Microloans  Assisting applicants who have limited experience by providing them with an opportunity to gain farm management experience while working with a mentor;  Eliminate use of high cost personal loans and high interest credit cards;

  15. FSA Farm Loans: Lender of First Opportunity Direct Farm Loans. Microloans  Streamlined application process  Buy livestock, equipment, crop inputs, feed, expenses,  Low, fixed interest rate  Some farm experience, self-guided apprenticeship, or mentor  Repayment terms 1-7 years  Maximum $50,000  Minimum collateral; 100-150% of loan

  16. Projects from Microloan

  18. FSA Farm Loans: Lender of First Opportunity FSA Has Two Types of Loans. 2 . Guaranteed Loans Commercial lender makes and services the loan Producer works directly with a lender (a local bank, farm credit, or a credit union) Is for when the producer falls short of lender’s normal standards due to repayment or collateral FSA may guarantee up to 90% of loan, in case of loss to lender Repayment rates and terms are the lenders’ . Operating, Real Estate, and Conservation

  19. FSA Farm Loans: Lender of First Opportunity Guaranteed Farm Loans. Partners With Local Lenders. Directly from your lender. Lender’s loan, lender’s money. Small to larger operations, expansions. Maximum of $1,392,000

  20. FSA Farm Loans: Lender of First Opportunity Guaranteed Farm Loans. Operating Loans . Up to $1,392,000 Buy livestock, equipment, crop inputs, general operating expenses. Usually 1 – 7 years Rate determined by Lender Revolving line of credit available

  21. FSA Farm Loans: Lender of First Opportunity Guaranteed Farm Loans. Real Estate/Farm Ownership Loans . Up to $1,392,000 Buy farmland, construction, repairs, refinancing. Usually 20 - 30 years Rate determined by Lender

  22. FSA Farm Loans: Lender of First Opportunity Guaranteed Farm Loans. LAND CONTRACT GUARANTEES . Financial guarantees to the land contract holder Seller makes application to FSA Sale to beginning farmer or historically underserved Lesser of $500,000 or appraised value of property Buyer must provide minimum 5% down Interest rate is fixed at FSA direct FO rate + 3%

  23. FSA Farm Loans: Lender of First Opportunity Guaranteed Farm Loans. LAND CONTRACT GUARANTEES . Prompt Payment Guarantee: up to the amount of three amortized annual installments, taxes and insurance Standard Guarantee: 90% of the outstanding principal balance under the land contract. Guarantee period is 10 years, no balloon during the 10 years guarantee period Contract must be minimum of 20 years

  24. FSA Farm Loans: Lender of First Opportunity General qualifications for all loans. Be family-sized farm (not just a rural residence, generates at least $1,000.00 in income) Unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs Minimum level of experience or education Satisfactory credit history Citizen, non-citizen national, or qualified alien

  25. FSA Farm Loans: Lender of First Opportunity General qualifications for all loans. Not delinquent on a federal debt Possess legal capacity to incur loan obligations Not caused FSA previous loss Be within time restrictions as to the number of years they can receive FSA assistance Entity and all members must meet eligibility criteria

  26. Farm Loan Programs Information Chart Type of Loan Maximum Loan Amount Rates and Terms  Direct Farm Ownership $300,000 Term: Up to 40 years  Interest rate: 3.5% Fixed* Direct Farm Ownership $300,000  Up to 40 years Participation  Interest rate: 2.5% Fixed* 50/50 Direct Farm Ownership The lowest of the following:  Term: Up to 20 years Down Payment  45% of the farm or ranch  Interest rate: 1.5% Fixed* 5/45/50 purchase price  45% of the appraised value  $300,000 Direct Operating $300,000  Term: 1 to 7 years Microloan up to $50,000  Interest rate: 2.5% Fixed* Youth up to $5,000 Direct Emergency The lowest of the following:  Term: 1 to 7 years (possibly  100% of actual production up to 20 years) for non-real or physical losses estate purposes   $500,000 Up to 40 years for physical losses on real estate  Interest rate: 3.5 Fixed*

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