2. Farm Loan Programs Direct Loans –FSA makes and services direct loans and provides supervised credit –Funds come from the U.S. Treasury Guaranteed Loans –The lender makes and services the loan –FSA guarantees loans made by conventional lenders for up to 95 percent of any loss

3. Farm Loan Programs Loan Program Delivery Direct loan requests are processed and serviced in local offices Guaranteed requests are completed by the lender and producer and submitted to FSA for processing Upon request, FSA staff will assist applicants in completing paperwork

4. Farm Loan Programs Types of Farm Loan Programs Farm Ownership (FO) Loans Farm Operating (OL) Loans Emergency (EM) Loans (only Direct)

5. Farm Loan Programs Loan Limitations Direct FO - $ 300,000 Direct OL - $ 300,000 Microloan - $ 50,000 Microloan - $ 50,000 Youth - $ 5,000 Youth - $ 5,000 EM - $ 500,000 (or amount of loss, whichever is lower) whichever is lower)Guaranteed: Combined G-FO and G-OL cannot exceed $1,399,000 for FY 2016 (changes annually based on rate of inflation applicable to FY)

6. Farm Loan Programs Farm Loan Programs General Eligibility Requirements Direct and guaranteed applicants must: –Be unable to obtain sufficient credit elsewhere –Be a citizen or a legal resident alien –Possess legal capacity to incur the loan obligation –Have acceptable credit history –Be the owner-operator or tenant-operator of a family farm

7. Farm Loan Programs General Eligibility Requirements Continued Direct and guaranteed applicants must: –Not be delinquent on federal debt –Not have outstanding unpaid judgments –Not have caused the agency a loss by receiving debt forgiveness (some receiving debt forgiveness (some exceptions) exceptions) – Not have been convicted of planting, cultivating, growing, producing, cultivating, growing, producing, harvesting, or storing a controlled harvesting, or storing a controlled substance within the last five years substance within the last five years

8. Farm Loan Programs FSA Direct Loans A direct loan applicant must: –Meet general eligibility criteria –Have applicable education, training, or farm experience that provides reasonable prospects of success (For an FO loan, must have participated in the operations of a farm or ranch for at least 3 years)

9. Farm Loan Programs FSA Direct Loans Continued A direct loan applicant must: –Develop a realistic Farm Business Plan that projects repayment ability for the loan –Provide adequate collateral for the loan –Agree to take borrower training courses and “graduate” to private sector credit when able to do so –Not exceed restriction on years of eligibility

10. Farm Loan Programs Direct Loan Making Operating Loans Purposes: Purchase Equipment Purchase Livestock Production Expenses Refinance operating expenses (other than FSA) OL loans are repaid in 1 to 7 years

11. Farm Loan Programs Direct Loan Making Microloans Microloans are operating loans, either annual or term, that do not exceed $50,000. Microloans have a simplified application process with paperwork and verification requirements that are more proportional to smaller loans and operations. Alternative managerial requirements for Microloans may be acceptable.

12. Farm Loan Programs Direct Loan Making Youth Loans Must comply with general eligibility requirements Must be at least 10 yrs. old and under 21 Must have recommendation and consent from parent or guardian The outstanding principal balance cannot exceed $5,000. Must have recommendation from advisor (4-H, Vo-Ag teacher, scout leader, etc.) Vo-Ag teacher, scout leader, etc.)

13. Farm Loan Programs Direct Loan Making Farm Ownership Loans FO loan repayments can be scheduled for up to 40 years Loan Purposes: Purchase Land Make Capital Improvements Promote Soil and Water Conservation Loan closing and related expenses

14. Farm Loan Programs Direct Loan Making Farm Ownership Downpayment Loans Applicants must: - be beginning farmers or SDAs (minorities - be beginning farmers or SDAs (minorities or women) or women) - provide a minimum downpayment of 5% - provide a minimum downpayment of 5% Downpayment loans will not exceed 45% of the lesser of: 1)The purchase price 2)The appraised value of farm to be purchased, or 3)$667,000 (maximum loan of $300,000)

15. Farm Loan Programs Direct Loan Making Farm Ownership Downpayment Loans Continued Maximum FSA loan is 20 years Interest rate is 4% below regular direct FO rate but no less than 1.5% FSA can guarantee the balance with a term of no less than 30 years and no balloon payment due for the first 20 years No guarantee fee charged There is no limit on the purchase price of the property

16. Farm Loan Programs Direct Loan Making Farm Ownership Joint Financing Loans FSA encourages using joint financing arrangements where an applicant obtains financing from another lender, which can be a commercial lender, a State program, or the seller of a farm. The applicant will use this financing along with FSA financing for any authorized FO purposes. If FO is part of a joint financing arrangement and the amount of FSA’s loan does not exceed 50% of the total amount financed, the interest rate charged by FSA will be the greater of the following: - current direct FO interest rate minus 2% - 2.5%

17. Farm Loan Programs Direct Loan Making Emergency Loans Used for real estate and operating purposes where a disaster or quarantine has been declared Used for real estate and operating purposes where a disaster or quarantine has been declaredPurposes: –Refinance debts –Repair/replace farm property BuildingsMachinery/LivestockFeed Other items

18. Farm Loan Programs Direct Loan Making Applications Applications for direct loan assistance may be submitted to the FSA local office serving the area where the operation is located Local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture, Farm Service Agency Applications, other forms, Office locations are available online at: www.fsa.usda.gov

19. Farm Loan Programs Guaranteed Loans Guaranteed loans are: Made and serviced by local agricultural lenders Funded by the lender Used by lenders to assist producers who don’t meet normal underwriting standards.

20. Farm Loan Programs Guaranteed Loan Making Eligibility To qualify for an FSA Guarantee, a loan applicant must: –Meet the general eligibility requirements –Be unable to obtain a loan without a guarantee –Have a feasible plan and adequate collateral as determined by the lender

21. Farm Loan Programs Farm Ownership (FO) Loans Farm Operating (OL) Loans Operating Lines of Credit Types of FSA Guaranteed Farm Loans

22. Farm Loan Programs The interest rate a lender charges: – –must not exceed what that lender would normally charge its average farm customer – –Maximum interest rate based on LIBOR and Treasury Rates – –can be fixed or variable Guaranteed Loan Making

23. Farm Loan Programs For guaranteed loans, applicants must apply to a commercial lender who participates in the Guaranteed Loan Program Local FSA offices have lists of participating lenders Guaranteed Loan Making

24. Farm Loan Programs Loan programs are funded by annual Congressional Appropriations Appropriation levels may fall short of demand, especially direct farm ownership loans Loan funds are allocated to states There are separate allocations of SDA and beginning farmer targeted funds Program Funding

25. Farm Loan Programs As defined by law, an underserved applicant is one who is a member of a group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as a member of a group, without regard to their individual qualities. As defined by law, an underserved applicant is one who is a member of a group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as a member of a group, without regard to their individual qualities. Underserved groups are African Americans, American Indians, Alaskan Natives, Hispanics, Asians, Pacific Islanders, and Women. Underserved groups are African Americans, American Indians, Alaskan Natives, Hispanics, Asians, Pacific Islanders, and Women. Targeted Underserved Applicant

26. Farm Loan Programs FSA does not have a specific loan program for underserved applicants, but rather targets funds in existing programs to applicants that meet the definition The targets are set by law Underserved loan applicants must meet loan program requirements Targeted Underserved Applicants

27. Farm Loan Programs FSA provides direct and guaranteed loans to beginning farmers and ranchers FSA targets a portion of its direct and guaranteed FO and OL funds to beginning farmers Beginning Farmer Loans

28. Farm Loan Programs A beginning farmer or rancher is an individual or entity who: (1) has not operated a farm or ranch for more than 10 years more than 10 years (2) meets the loan eligibility requirements of (2) meets the loan eligibility requirements of the program to which he/she is applying the program to which he/she is applying (3) for an FO loan, does not own a farm (3) for an FO loan, does not own a farm greater than 30 percent of the average greater than 30 percent of the average size farm in the county size farm in the county Beginning Farmer Loans

29. Farm Loan Programs A good farm business plan is critical Applicants should: –Set short and long term goals –Plan conservatively –Have records to support production projections –Have good financial records –Get help from experts (Extension, State Programs, etc.) Application Tips

30. Farm Loan Programs Application forms are available from FSA Offices All forms are available via internet as well No one can be denied an application or other forms Application Tips

31. Farm Loan Programs Applicants may ask FSA employees for help to complete the paperwork Other sources of free assistance- Extension Service USDA Outreach Grant Recipient Organizations Application Tips

32. Farm Loan Programs Contact the Local FSA Office Visit the FSA Website: www.fsa.usda.gov www.fsa.usda.gov For More Information

33. Farm Service Agency Farm Loan Programs QUESTIONS?