COLLEGE STATION – The Agricultural Services Agency (FSA) of the United States Department of Agriculture (USDA) reminds producers that the FSA offers home and farm loans to agricultural producers who may not successfully obtaining loans from their traditional financial institutions due to COVID-19. Farmers who cannot obtain trade credit from a bank can apply for direct or guaranteed loans from the FSA.
“Agriculture and ranching are capital intensive activities and the FSA is committed to helping producers maintain their farming operations during this time of crisis,” said Gary Six, executive director of the FSA in Texas. . “FSA loans are designed to help beginning and historically underserved farmers and ranchers, as well as those who have suffered financial setbacks due to natural disasters or economic downturns. Producers may find that an FSA loan is the best option for them if they cannot qualify for a loan from their traditional financial institutions or other financial institutions due to COVID-19. “
USDA offers a variety of loans to meet different production needs. Direct loans are granted to applicants by the FSA. Secured loans are granted by lending institutions which arrange for the FSA to guarantee the loan. FSA can guarantee up to 95% of the loss of principal and interest on a loan. The FSA guarantee allows lenders to make agricultural credit available to producers who do not meet the lender’s normal underwriting criteria.
The Direct Guaranteed Loan program offers two types of loans: farm property loans and farm loans.
Farm property loan funds can be used to buy or expand a farm or ranch; purchase any easements or rights of way necessary for the operation of the farm; construct or improve buildings such as a dwelling or a barn; promote the conservation and development of soil and water; and pay closing costs.
Farm business loan funds can be used to purchase livestock, poultry, farm equipment, fertilizers, and other materials needed to operate a farm. Funds from the operating loan can also be used for family living expenses; refinancing of debts under certain conditions; pay the salaries of hired farm workers; installing or improving water supply systems for the home, livestock or irrigation; and other similar improvements.
The repayment terms for direct operating loans are expected to range from one to seven years. The financing of direct loans to agricultural property cannot exceed 40 years. Interest rates for direct loans are set periodically based on the government’s cost of borrowing. The secured loan terms and the interest rates are set by the lender.
For more information on FSA agricultural loan programs, please contact your local FSA office or visit farms.gov.