The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) is reminding producers that FSA offers farm ownership and farm operating loans to agricultural producers who may not find success obtaining loans from their traditional financial institutions because of COVID-19. Farmers who cannot obtain commercial credit from a bank can apply for FSA direct or guaranteed loans.
“Farming and ranching is a capital-intensive business and FSA is committed to helping producers maintain their agricultural operations during this time of crisis,” said Lois Van MARK, FSA State Executive Director in Wyoming. “FSA loans are designed to assist beginning and historically underserved farmers and ranchers, as well as those who have suffered financial setbacks from 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 with their traditional financial institutions or other financial institutions because of COVID-19.”
USDA offers a variety of loans to meet different production needs. Direct loans are made to applicants by FSA. Guaranteed loans are made by lending institutions who arrange for FSA to guarantee the loan. FSA can guarantee up to 95 percent 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 and guaranteed loan program offers two types of loans: farm ownership loans and farm operating loans.
Farm ownership loan funds may be used to purchase or enlarge a farm or ranch; build or improve buildings; and promote soil and water conservation and development.
Farm operating loan funds may be used to purchase livestock, poultry, farm equipment, fertilizer, and other materials necessary to operate a farm. Operating loan funds can also be used for refinancing debts under certain conditions; paying salaries for laborers; installing or improving water systems for home, livestock or irrigation use; and other similar improvements.
Repayment terms for direct operating loans are scheduled from one to seven years. Financing for direct farm ownership loans cannot exceed 40 years. Interest rates for direct loans are set periodically according to the government’s cost of borrowing. Guaranteed loan terms and interest rates are set by the lender.
For more information on FSA’s farm loan programs, contact your local FSA office or visit farmers.gov.
FSA Starting to Issue Guidance on Coronavirus Food Assistance Program
Farmers and ranchers across the country are anxiously waiting to hear details on USDA’s Coronavirus Food Assistance Program (CFAP). Producers should be able to hear something soon though as the FSA has started the process of preparing state and county offices for the program. County offices are being alerted that they may be dealing with producers that have never dealt with the Farm Service agency previously.
For those growers, FSA offices will need to collect several forms relative to verifying eligibility for CFAP payments, including farm income certifications. On the key topic of pay caps, FSA said details on that will be issued in the handbook which will cover operation of the program.
The final rule was sent to the Office of Management and Budget (OMB) May 5th and it still was listed as being under review as of late Monday.