The U.S. Department of Agriculture’s Farm Service Agency offers a number of farm loan programs that provide farmers and ranchers financing and support for their farming operations. Among its umbrella of programs, FSA caters to certain groups through targeted farm loans.
Eligibility for targeted farm loans begins at what kind of farmer are you. You see, these farming loans target the following groups:
- Youth
- Women and minority groups
- Beginner farmers and ranchers
The Youth
FSA gives young individuals an opportunity to start an income-producing project that will hone their skills and experience in agriculture. FSA’s youth loans can be used to buy farm supplies, seeds, equipment, and livestock; buy, lease or repair farming tools and equipment; and pay the project’s operating costs.
For a project to receive funding via FSA’s youth loans, it must be related to agriculture, must be educational, and must be able to produce income enough to repay the loan.
The individual loan applicant and his/her project must be part of an organization or group like FFA, 4-H club, tribal youth group, or related agriculture youth organization. Indeed, the FSA requires a recommendation from a project supervisor who must have the apt training and experience to supervise the loan applicant’s project.
FSA can provide up to $5,000 in financing that will be repaid in one to seven years. Rates on youth loans are similar to that of direct operating farm loans.
Women and Minority Farmers
Through these targeted farm loans, FSA extends financing to socially disadvantaged (SDA) farmers who might have suffered prejudice due to race, ethnicity, or gender.
The agency offers two types of loans to these SDA farmers:
We can help you find a lender.- Direct farm ownership (FO) loans and operating loans (OLs) made by FSA to eligible farmers.
- Guaranteed FO loans and OLs made by private lenders as authorized by FAS.
Direct FO loans are generally used to buy or expand a farm or ranch and related easements or rights of way, build or improve farm buildings, and implement water and soil conservation projects. Guaranteed FO loans are for refinancing debt.
As to OLs, they are used to buy a wide range of farming supplies and fund operating expenses. They can also finance closing costs and refinance debt.
FSA further has a down payment program to help SDA farmers purchase land. To qualify, one must make a cash down payment of at least 5% of the purchase price and borrow not more than 45% of whichever is the lowest of the farm’s purchase price, its appraised value, or $667,000.
Beginner Farmers and Ranchers
FSA targets beginner farmers and ranchers who are not yet financially ready to obtain financing from traditional lenders.
It offers direct and guaranteed farm operating loan and operating loan funds for beginner farmers and ranchers.
To qualify as a “beginner” rancher/farmer, one must not have operated a farm for more than 10 years; has met the eligibility requirements of the loan program he/she is applying for; has a substantial role in the farm operations; and for FO loan purposes, must not own a farm greater than 30% of the applicable county’s average farm size.
FSA’s down payment assistance program for socially disadvantaged farmers is also applicable to beginner farmers and ranchers as well as farmers who are retiring.
These targeted farm loans ensure that individuals succeed in becoming tillers of the land, regardless of their age, background, experience, and race.
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