1. Becoming an FSA Guaranteed Lender
An Overview of the USDA Farm Service Agency
Farm Loan Programs

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What organization are you representing and where are you based?

3. Farm Service Agency Farm Loan Programs
1400 Independence Ave, SW
Washington, DC

4. Farm Service Agency Farm Loan Programs
Chris Beyerhelm
Deputy Administrator
for Farm Loan Programs

5. Guaranteed Loan Making
Farm Loan Programs
Guaranteed Loan Making
Randi Sheffer
Branch Chief
Trent Rogers
Senior Loan Officer

6. Guaranteed Loan Servicing
Farm Loan Programs
Guaranteed Loan Servicing
Jeff King
Branch Chief
Theresa Null
Senior Loan Officer

7. California FarmLink Certified CDFI Reggie Knox Executive Director
Santa Cruz, CA
CA FarmLink provides small loans to farmers for annual operating costs, equipment and infrastructure.

8. Farm Service Agency
FSA provides assistance to farmers through many programs:
Farm Programs:
Production, Emergencies & Compliance
Price Support
Conservation & Environmental Programs
Disaster Programs
Farm Loan Programs:
Direct Loans
Guaranteed Loans

9. Types of Loans Direct Loans
Applicant applies directly to one of the USDA-FSA Service Centers located across the country
Loan limits may be made up to $300,000
Guaranteed Loans
Applicant applies to an agricultural lender, who then applies to FSA for the guarantee
Guaranteed Loan limits may be made up to $1,355,000 (adjusted annually)

10. Benefits of a Guaranteed Loan
Provides an “Insurance Policy” for production agricultural loans
FSA reimburses the lender up to 95% of the principal and interest lost when a borrower can not pay back the loan
Mitigates risk when lending to borrowers who do not meet commercial lender underwriting standards
Less risk means lower interests for your borrowers

11. Benefits Turns a loan into a marketable security
Guaranteed portion of loan can be sold on the secondary market
Provides capital that can build portfolio
Provides source of capital through servicing fees

12. Benefits Using guaranteed & direct farm ownership programs together
Downpayment Program (SDA/BF)
5% down payment provided by borrower
Up to $300,000 financed by FSA directly
Balance financed by lender
Participation
If FSA provides ≤ 50%, special interest rates apply

13. Benefits Gain experience underwriting agricultural loans
FSA will help you through the underwriting process
FSA provides annual lender training

14. Purposes Farm Ownership (FO) Direct & Guaranteed Use of Proceeds
Purchase farm
Construct buildings or other capital improvements
Soil and water conservation
Pay closing cost
Refinance debt incurred for FO purposes (Guaranteed only)
Interest Rates-Fees
Direct: varies, based on Government’s borrowing cost (currently 4%)
Guaranteed: determined by lender
1.5% Guaranteed Fee
Terms
up to 40 year

15. Purposes Farm Operating (OL)(LOC) Direct & Guaranteed Use of Proceeds
Purchase livestock, machinery and equipment
Pay annual operating and/or family living expenses
Refinance operating debt
Pay closing cost
Payment of non-delinquent payments on term debts (OL/FO)
Interest Rates-Fees
Direct: varies, based on Government’s borrowing cost (currently 2.25%)
Guaranteed: determined by lender
1.5% Guaranteed Fee
Terms
up to 7 year

16. Eligibility Requirements
Standard Eligible Lender (SEL)
SEL is basic level of participation in the FSA Guaranteed Loan Program
Lender must have experience in making and servicing agricultural loans (or work with an experienced packager)
Lender must maintain an office near enough to the collateral’s location for proper servicing

17. Becoming a SEL CDFI’s requesting SEL approval will need to provide:
Cover letter requesting SEL status
Copy of year-end financial statement and agriculture performance history for past 2 years
Schedule of current sources of funding and funds available for agriculture lending
Current loan loss reserve
Requests are submitted to the National Office through the State Executive Director for the State where the CDFI is located.

18. Application Process SELs submit the following to FSA: Application form
Loan narrative
Balance sheet
Cash flow budget
Description of farmed land
Credit report
Environmental information (if needed)
Verification of income/debts
Financial/production history
FSA will:
Make determination, approve and obligate loan request

19. Questions

20. Guaranteed Loan Servicing
Guaranteed against loss as long as:
Serviced according to standard Ag Lending practices and standards, and
The requirements of the lenders agreement and the guarantee are met.

21. General Servicing Lender Responsibilities:
Apply standard agricultural loan servicing principals to guaranteed loans:
Accounting for loan proceeds
Monitoring collateral and tracking the sale of collateral
Maintain regular contact with the borrower
Servicing a guaranteed loan is no different than servicing a non-guaranteed loan.

22. Reporting
Guaranteed Loan Status reports as of March 31 and September 30 of each year.

23. Servicing Tools
FSA works with lenders to help assure that every borrower has the opportunity to be a successful farmer or rancher. The guarantee provides servicing flexibility that results in favorable terms for:
Rescheduling
Deferral
Debt Writedown

24. Other Servicing Tools
Servicing tools that are also available to assist borrowers with options to improve cash flow or help to ensure the success of the farming or ranching operation include:
Subordinations
Partial Releases
Interest Rate Adjustments
Debt Consolidation

25. Default Servicing
Loans are in default when 30 days past due on a payment or in violation of provisions of the loan documents. Default status reports are required for delinquent loans every 60 days until the default is resolved or loss claim submitted.

26. Loss Claims
Must be supported by documentation that lender has serviced the loan as required.
Example:
Accounting for use of proceeds
Accounting for all security

27. FSA Website: http://fsa.usda.gov/FSA/
Sign-up for FSA electronic notifications
Download Fact Sheets for FSA Programs
Locate FSA State and County Service Center Office (FSA staff and phone number)
CDFI’s can also contact:
FSA State Office
Local USDA-FSA Service Center

28. Questions