BEGINNING WOMEN FARMERS CONFERENCE
FSA Farm Loan Programs
Mission Statement Types of Farm Loan Programs Available Loan Application Process Applicant Eligibility Requirements Breaking Down Barriers for Beginning
Farmers; SDA Applicants When The Loan Application is Denied Additional Resources
Program Mission
To advance family farmers and ranchers build and sustain family farms and ranches and develop the financial and business expertise to qualify for commercial credit.
“Serving Family Farms, Cultivating Opportunities”
http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=landing
Farm Loan Programs
DIRECT LOANS
Available to farmers and ranchers unable to obtain credit from commercial lenders
Financed by Congressional appropriation; FSA makes and services the loan
Temporary source of financing; Graduation to Commercial Credit is Goal
GUARANTEED LOANS
FSA guarantees qualified loans though commercial lenders for up to 95 percent of the loan amount.
Financed by commercial lending institution; Lender makes and services the loan.
May be combined with Direct Loan financing, under certain conditions
Direct and Guaranteed Loans
Loan Program
Maximum
LoanAmount
Use of Proceeds Rates and Terms
Direct FarmOwnership(FO)
$300,000 • Purchase farm• Construct and repair buildings or make other capital improvements
• Soil & water conservation
• Refinance farm debt
• Term: Up to 40 years• Interest rate: based on Agency borrowing costs
• Limited Resource interest rate available
Direct Operating (OL)
$300,000 • Purchase livestock, poultry, equipment
• Purchase feed, seed, farm chemicals and supplies
• Family subsistence and farm operating expenses
• Minor Improvements; Repairs
• Refinance farm debt
• Term: 1 to 7 years• Interest Rate: based on Agency borrowing cost
• Limited Resource interest rate available
Direct Loan Program Overview
Loan Program
Maximum
LoanAmount
Use of Proceeds Rates and Terms
Direct Emergency (EM)
$500,000 • Restore or replace essential property
• Pay all or part production costs for disaster year
• Family Subsistence and Farm Operating Expenses
• Reorganize operation• Refinance farm debt
• Non-Real Estate Term: 1 to 7 years
• Real Estate Term: Up to 40 years
• Interest Rate: 3.75%
Direct Farm Ownership Downpayment Program
$225,000 • Purchase farm • Min. Downpayment: 5%
• Term: 20 years• Interest rate: Direct FO rate less 4% with a floor of 1.5%
Direct Loan Program Overview
Loan Program
Maximum
LoanAmount
Use of Proceeds Rates and Terms
Guaranteed Farm Ownership(FO)
$1,214,000*
*Adjusted annually based on inflation
• Same as Direct FO loan, except the loan may be used to refinance real estate debts
• Term: Up to 40 years• Interest rate: Not to exceed rate charged to lender's average agricultural loan customers
GuaranteedOperating (OL)
$1,214,000*
*Adjusted annually based on inflation
• Same as Direct OL loan
• Term: From 1 to 7 years• Interest rate: Not to exceed rate charged to lender's average agricultural loan customers
• Interest Assistance: reduces rate by 4%
Guaranteed Loan Program Overview
Guaranteed Loan Program Overview
Loan Program
Maximum
LoanAmount
Use of Proceeds Rates and Terms
Guaranteed Conservatio
nLoan(CL)
$1,214,000*
*Adjusted annually based on inflation
• Facilitate conservation practices
• Term: Varies; depends upon type of collateral for loan
• Interest rate: Not to exceed rate charged to lender's average agricultural loan customers
Land Contract Guarantee(LC)
$500,000*
*No money exchanges between parties as long as applicant makes payments
• Guarantees Contract Installments, real estate taxes and insurance or outstanding principal balance, for seller of family farm through Land Contract to Beginning Farmer or SDA
•Term: 20 years
•Interest rate: fixed at Direct FO loan rate in effect at time the guarantee is issued, plus three percentage points•Requires 5% down payment from applicant
Rural Youth Loans
Finance modest, income-producing, agriculture-related, educational project that falls under authorized loan purposes
Eligibility: 10 to 20 years old Lives in community 50,000 persons or less Project related to 4-H, FFA, Grange Youth Parental permission and supervision Project Advisor
Maximum Loan Amount is $5,000 Rates and Terms
1 – 7 years, depending on loan amount and security Direct OL interest rate
Farm Storage Facility Loan
FSFL Program Purpose
Provides low interest financing for producers to build or upgrade farm storage and handling facilities to store the commodities they produce.
Eligible Commodities Corn, grain sorghum, rice, soybeans, oats, peanuts,
wheat, barley or minor oilseeds harvested as whole grain
Corn, grain sorghum, wheat, oats or barley harvested as other-than-whole grain
Pulse crops - lentils, chickpeas and dry peas Hay Renewable biomass Fruits, Nuts and Vegetables - cold storage facilities
Farm Storage Facility Loan
Maximum Loan Amount Maximum loan amount of $500,000
Loan Process Borrower must meet eligibility requirements COC or STC approval required before construction can
begin $100 application fee 15% cash down payment required
Rates and Terms 7 years; 10 years; or 12 years depending on amount of
loan Interest rate fixed for loan term at rate in effect the
month the loan is initially approved Interest rate is equivalent to the rate of interest charged
on Treasury Securities of comparable term and maturity
www.fsa.usda.gov
To research for a Farm Storage Facility Loan
select PRICE SUPPORT
Eligible Facility Loan Commodities
Corn, grain sorghum, rice, • soybeans, oats, peanuts, wheat, barley or minor oilseeds harvested as whole grain
Corn, grain sorghum, wheat, oats, barley harvestedas other-than-whole grain
Pulse crops – lentils, chickpeas and dry peas
Hay
Renewable biomass
Fruits (includes nuts) and vegetables – cold storage facilities
Honey “NEW in 2011!!!!”
Maximum Loan Amount
$500,000 per loan.
Facility Loan Terms Available
7 years, 10 years or 12 years depending on the amount of the loan
Interest rate is fixed for the loan.
Cost of Obtaining a Loan
Each applicant will be charged • a nonrefundable $100 application fee.
CCC will pay all collateral lien • searches and recording fees for filing Form UCC-1 and credit reports.
Applicants pay all other fees, such as severance agreements, attorney fees, real estate lien search fees, and instrument filing
fees.
For loans over $50,000, • applicants will be required to pay the cost of obtaining a title search/opinion or title insurance.
FARM SERVICE AGENCY ADMINISTERED PROGRAMS
Emergency Conservation Program (ECP)
ECP provides funding for farmers and ranchers to rehabilitate farmland damaged by wind erosion, floods,
hurricanes, or other natural disasters, and for carrying out
emergency water conservation measures during periods of severe drought.
Trade Adjustment Assistance for Farmers (TAAF)
TAAF provides technical assistance and cash benefits to eligible producers of raw agricultural commodities, such as fish or
blueberries, after an associated industry group petitions the Secretary for assistance. If the national average
price in the most recent marketing year for a commodity is less than 80 percent of the national average price in the preceding 5 marketing years as a result of increased imports of that
commodity, producers may be eligible for TAAF
assistance.
Noninsured Crop Disaster Assistance Program (NAP)
NAP provides financial assistance to eligible producers affected by drought, flood, hurricane, or other natural disasters.
NAP covers noninsurable crop losses and planting prevented by disasters. Landowners, tenants, or sharecroppers who share in the risk of producing an eligible crop are eligible.
Eligible crops include commercial crops and other agricultural commodities produced for food, including livestock feed or fiber for which the catastrophic level of crop insurance is unavailable.
Also eligible for NAP coverage are controlled-environment crops (mushroom and floriculture), specialty crops (honey and maple sap), and value loss crops (aquaculture, Christmas trees, ginseng, ornamental nursery, and turfgrass sod).
Grassland Reserve Program (GRP)
GRP is a voluntary program for landowners to protect, restore, and enhance grasslands on their property.
USDA’s NRCS and FSA jointly implement GRP to conserve vulnerable grasslands
from conversion to cropland or other uses and conserve valuable grasslands by
helping maintain viable ranching operations.
FSA COUNTY COMMITTEE ELECTION
FSA county committees are a link between the agricultural community and the U.S. Department of Agriculture (USDA)
Their role is to deliver FSA farm programs at the local level and work to ensure FSA agricultural programs serve the needs of local
producers.
BECOME A NOMINEE! eligible individuals must sign nomination form. The form includes a statement that the nominee agrees to serve if
elected.
WHO CAN VOTE?
Agricultural producers of legal voting age may be eligible to vote if they participate or cooperate in any FSA program.
A person who is NOT of legal voting age BUT supervises and conducts the farming operations of an entire farm also may be eligible to vote.
Members of American Indian tribes holding agricultural land are eligible to vote if voting requirements are met.
2013 ELECTION PERIOD
June 15, 2012 – KICKS OFF THE NEW ELECTION YEAR!!!The nomination period begins. Request nomination forms from the local USDA Service Center or obtain online at http://www.fsa.usda.gov/
elections
Aug. 1, 2012 – Last day to file nomination forms at the local USDA Service Center
Nov. 5, 2012 – Ballots mailed to eligible voters
Dec. 3, 2012 – Last day to return voted ballots to the USDA Service Center
Jan. 1, 2013 – Newly elected county committee members take office.
FSA is looking for YOU!
FSA county offices shall actively locate and recruit eligible candidates identified as minority and women farmers and ranchers as potential nominees for the county committee elections through outreach and publicity, including the development of partnerships with community-based organizations.
ROLE OF ADVISOR - IF NOT ELECTED
Advisors are appointed to county committees in counties or multi-county jurisdictions that have significant numbers of minority or women producers and lack such members on FSA county committees.
Advisors play an important role by providing diverse viewpoints and by representing the interests of minorities and women in decisions made by county committees.
FSA state committees officially appoint advisors who are recommended by county committees or community- based organizations.
https://public.govdelivery.com/accounts/USFSA/subscriber/new
Obtaining Loan Application Forms
DIRECT LOANS
Obtain application form and related information from:
FSA County Office or USDA Service Center
FSA web site: http://www.fsa.usda.gov
eGov web site at http://forms.sc.egov.usda.gov/
GUARANTEED LOANS
Directly contact commercial lender that makes farm loans
FSA County Office or USDA Service Center can provide list of lenders known to make guaranteed loans
Direct Loan Application Documents
1. Application Form
2. Financial and Production History 3 years of tax returns 3 years of production information
3. List of All Creditors- names, addresses, account
numbers
4. Written Description of All Farm Education, On-the-Job Training, and Farm Experience, including
Workshops; Extension Service Seminars; Internships; Mentorship
Membership in vocational agricultural organization such as 4-H, FFA, Grange Youth
5. Projected Farm Operating/Farm Business Plan Balance Sheet for next 12 months Cash Flow Projections for next 12months
6. Evidence you cannot obtain commercial credit if requested
7. Verification of all off-farm employment and income, including 2 most recent earning statements
8. Legal description of farm property owned, leased or to be owned or to be leased
9. Payment for credit report, which is obtained by the Agency
Direct Loan Application Documents
Getting Started
For FSA to make a farm loan:
Applicant must meet general and program-specific eligibility criteria
Must have adequate collateral for the loan 150% of loan amount, except Downpayment and Rural
Youth loans All non-essential assets
Loan funds must be used for authorized purposes
Realistic business plan must show projected total income exceeds projected total expenses (farm and off-farm)
Eligibility and Feasibility
Two Step Process:
Eligibility General Eligibility Requirements Loan-Specific Eligibility Requirements
Feasibility A realistic business plan indicates you can
repay the loan; appraisals indicate there will be enough collateral for the loan
Direct and guaranteed loan applicants must:
1. Be the owner-operator, or tenant-operator, of a family farm
All day-to-day management decisions Substantial amount of the labor required Recognized in the community as a family farm
2. Be unable to obtain sufficient credit elsewhere
3. Be a citizen, naturalized citizen, or a legal resident alien
4. Possess legal capacity to incur the loan obligation
5. Acceptable credit history
6. Have necessary experience, determined by loan type
General Eligibility Requirements
General Eligibility Requirements
7. Not be delinquent on any Federal debt or unpaid Judgments
8. Have not caused the Agency a loss by receiving debt forgiveness or payment of a guaranteed loss to lender, with some exceptions
9. No convictions for planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last five years or be prohibited by Court Order from receiving Federal assistance
10. No Federal Crop Insurance violations
Loan-Specific Eligibility Requirements
Direct Operating Loan
Meet all general eligibility requirements Have farm experience equal to minimum
1 year full production and marketing cycle
7 year term limit for direct OL assistance, with 1 time 2-year waiver
Beginning Farmers may receive no more than 10 years direct OL assistance
Loan-Specific Eligibility Requirements
Direct Farm Ownership Loan
Meet all general eligibility requirements
No prior debt forgiveness on direct or guaranteed
loan
Must be owner-operator of farm after loan closing
May not have direct FO outstanding for more than 10 years prior to new FO loan closing
3 years farm managerial experience out of 10 years prior to date loan application submitted
Demonstrated through combination of: Education On-The-Job Training Farming Experience
Must be able to show documentation through: Tax returns Farm Records Affidavits or other documentation
Give details! Everything counts!
Farm Managerial Experience
Education
4-year or graduate college degree in agriculture-related field
2-year degree from technical college in agriculture-related field
Vocational or general agriculture classes in high school along with farm experience & successful 4-H/FFA agriculture projects
Extension Service farm management courses, workshops, seminars
Community college or other academic courses, workshops, seminars
Farm Managerial Experience
On-The-Job Training
Hired farm labor with management responsibilities
Apprenticeship Program, current or recent
Mentorship or Mentoring Partnership, current or recent
Community Supported Agriculture training farm; Urban and Community Farms (grower, not as participant)
Participation in Refugee Agriculture Partnership Program
Farm Managerial Experience
Farming Experience Owner, manager or operator of farm business for
minimum 1 production & marketing cycle Monitor production and marketing Hire, assign and supervise workers Oversee maintenance of property and equipment Determine when to cull livestock Select seed varieties; when to plant/seed/harvest;
when to fertilize & method Determine crop transportation or storage
requirements
Raised on farm, management decision-making
Employed as farm manager or farm management consultant for minimum 1 production & marketing cycle
Farm Managerial Experience
Establish realistic short term (1 year) & long term (5 year)
goals
Financial statement based on supportable current values and accurate reflection of all debts owed
Yield/production projections based on 3-year history (unless impacted by disaster)
Use of State Extension Service enterprise budgets Use of National Agricultural Statistics Service data
Projected price based on current economic forecasting
Expenses based on three year history
Ending cash balance must be positive
Feasibility & The Farm Business Plan
Submitting the Loan Application
Application submitted in name of actual operator of farm; Agency mails or hand-delivers confirmation of receiving loan application
Agency determines completeness of application
Within 10 days applicant mailed detailed letter advising what is needed to determine application complete Applicant given 20 calendar days to provide the requested information
Submitting the Loan Application
If after 20 days the application is still INCOMPLETE, additional letter is sent providing for additional10 calendar days to provide the requested information
If information is not received after the additional 10 days, application is administratively WITHDRAWN and cannot be reactivated
If/When application is COMPLETE, written confirmation is sent to applicant within 10 calendar days
Agency goal is to make loan decision within 30 days
Socially Disadvantaged Farmers (SDA)
and Beginning Farmers (BF)
FSA targets a significant portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to SDA and BF farmers.
SDA & BF designation is funding source; not loan type
Must voluntarily declare race and ethnicity to receive targeted funds
Breaking Through Barriers
An SDA applicant identifies self as:
American Indian or Alaskan Native
African American or Black
Asian
Native Hawaiian or other Pacific Islander
Hispanic or Latino
Women
Breaking Down Barriers
A Beginning Farmer is one who: Meets loan eligibility requirements Has not operated a farm/ranch more than 10 years Provides substantial day-to-day labor &
management Agrees to participate in loan assessment and
borrower training May not own real farm property exceeding 30%
county median acreage as determined by Census of Agriculture (excludes OL applicants)
Available resources insufficient to allow applicant to farm on a viable scale
All entity applicants must meet Beginning Farmer definition
Breaking Down Barriers
Discuss the decision with the loan officer Seek alternatives that might change the
decision, now or in the future
Appeal – It’s Your Right Agency Reconsideration of the decision Mediation by impartial third-party Appeal & have case heard by National Appeals
Division Hearing Officer
When The Decision is “No”
May just need additional or different documentation
May take additional action or actions over time Credit
Contact creditors /credit bureau ; correct credit report errors
Build good faith & better credit record by meeting all obligations over period of time (at least 1 year)
Experience Consider leasing until experience criteria is met Get training/experience through coursework;
apprenticeship
When The Decision is “No”
Ask some “What If’s….” Develop alternate farm plan with different enterprise
mix Obtain or increase non-farm income Consider a smaller operation, at least to start Think about leasing or renting, rather than buying
assets; cheaper/practical Partner with someone or swap labor for use of
equipment
Keep in mind these are ideas intended to help Keep in mind these are ideas intended to help you reach your goals. Don’t be discouraged.you reach your goals. Don’t be discouraged.
You always may submit an FSA loan You always may submit an FSA loan application at any time, even if you’ve been application at any time, even if you’ve been denied!denied!
When The Decision is “No”
Additional Resources
FSA: http://www.fsa.usda.gov
Start 2 Farm: http://www.start2farm.gov
National Agricultural Library: http://www.nal.usda.gov
Risk Management Agency: http://www.rma.usda.gov
Cooperative Extension System: http://www.csrees.usda.gov/Extension/
Use other experts- Farm Advisor/Farm Management Specialist State Farm-Link Programs and State Departments of
Agriculture Other state or community organization