Farm Service Agency Farm Loans Program Lender of First Opportunity

Delivery of FSA Programs Congress enacts and funds programs Secretary of Agriculture Administrator, Farm Service Agency Develops regulations, policies, procedures to implement the programs State Executive Director carries out the programs in each state Local Offices deliver the programs to farmers Approximately 80 local offices in Minnesota

FSA Farm Loans: Lender of First Opportunity National Presence, Local Service

What We Do In Farm Loan Programs FSA Farm Loans: Lender of First Opportunity Provide temporary assistance through loans, credit counseling, and management advice to farmers to improve the farmer’s financial position so that the farmer may qualify for future loans through commercial credit sources.

Who We Help Farmers that lack experience, credit history, or significant net worth Socially disadvantaged farmers (women, minorities) Farmers with non-traditional enterprises o Vegetables, organic, specialty, value-added Farmers experiencing economic, production, or physical disasters FSA Farm Loans: Lender of First Opportunity

FSA helps thousands of Minnesota farm families…. 2,736 farm families with $382 million of direct loans 1,866 farm families with a $657 million of guaranteed loans FSA is involved in financing 10% of Minnesota’s farmers FSA Farm Loans: Lender of First Opportunity

FSA Has Two Types of Loan Programs Direct Loans FSA loan officer works directly with the farmer Comprehensive financial planning services Repayment terms tailored to farmer’s needs. Low interest rate Operating, Real Estate, Emergency FSA Farm Loans: Lender of First Opportunity

FSA Has Two Types of Loan Programs Guaranteed Loans Provides farmers credit through a conventional lender Used as risk reduction tool Lender determines the interest rate and loan terms. Acts like an “insurance policy” Operating and Real Estate FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans Operating Loans Buy livestock, equipment, crop inputs, feed, expenses, refinance debt Low, fixed interest rate (1.375%) Repayment terms tailored to loan purpose and farmer’s repayment ability. Typically 1 – 7 years. Maximum of $300,000 Collateral would include the property being financed FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans Micro Loans Purposes are same as direct operating loans Low, fixed interest rate (1.375%) Repayment terms tailored to loan purpose and farmer’s repayment ability. Typically 1 – 7 years. Maximum of loan of $35,000 and total outstanding direct operating balance not to exceed $35,000 Minimal farm training and managerial ability Collateral would include the property being financed FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans Youth Loans Teach responsibility, caretaking, money management Start a modest agricultural income producing project 4-H or FFA Youths between ages of 10 and 20 Low, fixed interest rate (1.375%) Maximum of $5,000 Town with a population of 50,000 or less FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans Real Estate Loans Purchase farmland, building sites, construction, repair Low, fixed interest rate (1.5% - 3.5%) Repayment terms usually years. Maximum of $300,000 Collateral would include farm being financed 3 years previous management experience FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans – Real Estate Down Payment - 5/45/50 Used to purchase farm Farmer must provide at least 5% down payment Open only to beginning farmers and socially disadvantage applicants FSA Farm Loans: Lender of First Opportunity

Direct Farm Loans – Real Estate Down Payment - 5/45/50 - Example $500,000 Farm Purchase 25,000 Cash down payment $250,000 Lender $225,000 FSA 2 nd mtg % 20 yrs. FSA Farm Loans: Lender of First Opportunity

Guaranteed Farm Loans Operating Loans Up to $1,302,000 Line of credit Purchase annual operating expenses Up to 5 years Term Loan Buy livestock, equipment, refinance debt, and etc. Usually 1 – 7 years FSA Farm Loans: Lender of First Opportunity

Guaranteed Farm Loans Real Estate Loans Up to $1,302,000 Buy farmland, construction, repairs, refinancing Up to 40 years Guarantee allows loan to be sold on secondary market FSA Farm Loans: Lender of First Opportunity

General qualifications for all loans Own/Operate a family-sized farm Sufficient farm training and managerial ability Meet citizenship requirements Be unable to obtain loan from a commercial lender Acceptable credit history Legal capacity to incur the debt. FSA Farm Loans: Lender of First Opportunity

General qualifications for all loans No previous loss to the government There are some exceptions depending on type of loan No conviction for controlled substance No federal crop insurance disqualification No delinquent federal debt FSA Farm Loans: Lender of First Opportunity

Special qualification for direct Farm Ownership loan Applicant must have 3 years of farm experience within the past 10 years  Met by either farming on own or providing labor and management on a farm FSA Farm Loans: Lender of First Opportunity

Special qualification for direct Farm Ownership Downpayment loan  Beginning Farmers  Must not have farmed for more than 10 years  Must not own more than 30% of average median farm size for the county  Socially Disadvantage Applicants  Years farmed and farm size do not apply FSA Farm Loans: Lender of First Opportunity

General qualifications for all loans Farmer must have ability to repay the loan Must demonstrate ability to pay all farm expenses, personal living expenses, and all debt payments from farm and non-farm income sources. FSA considers financial ratios but does not base loan decision on ratios. Farmer must pledge collateral with a value at least equal to the loan amount FSA will take a lien on more collateral when available FSA Farm Loans: Lender of First Opportunity

We offer more than just loans Farm Planning Analyze income, expenses, and production at end of the production year Assist farmer in developing a cash flow projection for the next year Assist farmer in analyzing expansion, capital purchases, or enterprise changes The success of our customers is the cornerstone of our business

FSA Farm Loans: Lender of First Opportunity We offer more than just loans Professionals with training and backgrounds in lending and agriculture. Customers gain a source of guidance Help farmers establish goals for their farming operation Periodic visits to the farm

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