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Presentation on theme: "Introductions."— Presentation transcript:

1 Introductions

2 Who is FSA The Farm Service Agency (FSA), is an agency within the United States Department of Agriculture (USDA). FSA’s Farm Loan Programs (FLP) can provide credit to agricultural producers who are unable to obtain private, commercial credit. FSA places special emphasis on providing loans to beginning, minority and female farmers and ranchers. LOAN TYPE FY FY 2012 Direct OL , $ 68,349, , $ 73,859,061 Guaran OL $ 76,979, $ 55,498,938 Emergency $ , $ 5,788,610 Direct FO $ 22,328, $ 22,126,667 Direct CL 10 $ , $ Guaran FO $ 31,779, $ 39,156,620 Totals , $200,337, , $196,429,896 FY 2012: Guaranteed Loan Program: 70 loans to BF; 24 to SDA Direct Loan Program: 358 youth loans; 643 loans to BF; 492 to SDA % of the loans made in Texas were made to BF and SDA

3 An Introduction to FSA Farm Loans
USDA – Farm Service Agency Farm Loan Programs America’s Lender of First Opportunity If you are a farmer or rancher who is unable to obtain credit from another lender to start, purchase, sustain, or expand your family farm you may be able to obtain a loan through FSA’s Farm Loan Programs. FSA has different types of loans depending on your current situation and credit needs. FSA loan officers are available to answer your questions and to help with the application process.

4 What Type of Loans are Available
USDA – Farm Service Agency Farm Loan Programs America’s Lender of First Opportunity Direct Loan Program Operating Microloan* Farm Ownership Emergency Youth Projects Guaranteed Loan Program Line of Credit Conservation Land Contract Guarantee These loan programs can be discussed in a little more detail when introducing slide 5 and 6 Point out the different loan programs we administer, however we will focus our discussion today mainly on the ML program

5 Farm Loan Programs Information Chart
Type of Loan Maximum Loan Amount Rates and Terms Direct Farm Ownership $300,000 Term: Up to 40 years 3.375% as of June 1, 2013 Direct Down Payment The lowest of the following: 45% of the farm or ranch purchase price 45% of the appraised value $225,000 Term: Up to 20 years 1.50% as of June 1, 2013 Direct Operating Term: 1 to 7 years 1.250% as of June 1, 2013 Direct Emergency 100% of actual or physical losses $500,000 Term: 1 to 7 years (possibly up to 20 years) for non-real estate purposes Up to 40 years for physical losses on real estate 2.250% as of June 1, 2013 Youth Loan $5,000 In general: Direct Farm Ownership: purchase a farm; enlarge an existing farm; construct new farm buildings and/or improve structures. Direct FO loan funds cannot be used to refinance real estate type loans. Direct Down Payment: Designed to assist SDA and Beginning farmers and ranchers. The applicant must make a 5% cash down payment. FSA can loan 45% for the down payment and the remaining balance may be obtained from a commercial lender or private party. Direct Operating: Annual operating loans are typically repaid within 12 months. Funds can be used to pay for farm operating expenses, machinery, equipment, livestock. Direct operating loans can also be used to refinance farm operating type debt. Emergency: Emergency loans are available to producers who operate in a county declared a disaster by the Secretary of Agriculture or the President. The use of EM funds are similar to the operating loan program designed to assist the producer recover from the natural disaster. For production loss loans, the producer must demonstrate a 30% loss in a single farming or ranching enterprise. Youth loans: loan funds can be used by eligible rural youth to finance modest ag related projects in association with membership in organizations such as 4-H or FFA or other similar type organizations.

6 Farm Loan Programs Information Chart Continued
Type of Loan Maximum Loan Amount Rates and Terms Guaranteed Operating The maximum loan amount is adjusted annually for inflation* Currently: $1,302,000 Term: 1 to 7 years 5 Year Line of Credit The interest rate is negotiated by you and your lender. Guaranteed Farm Ownership Term: Up to 40 years Guaranteed Conservation Term: Up to 30 years Land Contract Guarantee A maximum purchase price of the farm cannot exceed the lessor of: $500,000 Current market value of the property Term: Contract payments must be amortized for a minimum of 20 years with equal payments during the term of the guarantee. The guarantee period is 10 years. Interest Rate: Direct Farm Ownership rate plus 3% The guaranteed loan program requires a participating commercial lender. It is the lender’s decision to pursue a guarantee from FSA. A lender can obtain up to a 90% guarantee from FSA. The lender is charged a fee of 1.5% of the principal amount of loan guaranteed. In general: Guaranteed Operating: Annual farm operating expenses, purchase of equipment or livestock or refinance farm operating type debt Guaranteed Farm Ownership: Purchase a farm, enlarge a farm, construct farm buildings and improvements, or REFINANCE farm real estate type debt. (yes, we can refinance real estate type debt with this program) Guaranteed Conservation: Maximum guarantee to lender is 75% for this program. Loan funds can be used to implement any conservation practice in an NRCS approved Conservation Plan. Loan funds can also be used to refinance debts related to implementing an NRCS approved conservation plan. Eligibility for this type loan is expanded to include large and financially strong operations. Land Contract Guarantee: Program designed to assist the transfer of farms to Beginning and SDA farmers and ranchers through a land contract. The guarantee is issued to the seller of the farm real estate. The applicant must have a 5% down payment.

7 FSA’s Microloan Program
The Farm Service Agency (FSA) developed the Microloan(ML) program to better serve the unique financial operating needs of: Beginning farmers and ranchers Niche operations Smallest of family farm operations Examples might include; Direct marketing to restaurants and grocery stores, Organic production, Community supported agriculture (CSA’s) and farmers markets.

8 Fulfilling a Need Assisting applicants who have limited experience by providing them with an opportunity to gain farm management experience while working with a mentor; Eliminate use of high cost personal loans and high interest credit cards; Providing a bridge for Youth Loan borrowers to transition to larger-scale operations; Assisting the agricultural community by creating opportunities to start new businesses.

9 What is a Microloan Microloans are direct farm operating loans,
Annual Operating purposes Capital purchases – term loan Maximum Loan Amount is $35,000 Simplified application process and paperwork and verification requirements that are more proportional to smaller loans and operations.

10 An Overview Microloans can be used for operating expenses including but not limited to: • Initial start-up expenses; • Annual expenses such as seed, fertilizer, utilities, land rents; • Marketing and distribution expenses; • Family living expenses; • Purchase of livestock, equipment, and other materials essential to farm operations; • Minor farm improvements such as wells and coolers; • Hoop houses to extend the growing season; • Essential tools; • Irrigation; • Delivery vehicles

11 General Eligibility Requirements
Some general eligibility requirements include: Operator of a family sized farm, Unable to obtain sufficient credit elsewhere but have an acceptable credit history, U.S. citizen, non-citizen national, or qualified alien, Not delinquent on a federal debt, and Have sufficient managerial ability **Different types of loans have different eligibility requirements. For more information on general and loan specific eligibility requirements, visit our website at or see your local FSA loan officer. Meet General Eligibility Requirements: U.S. Citizen Must be a family size farm Legal capacity to incur the loan obligation Unable to obtain sufficient credit elsewhere Not delinquent on a federal debt No Prior FSA debt forgiveness* Satisfactory credit history No disqualification from Crop Insurance violations No conviction for controlled substance Demonstrate Management Ability Term limits sometimes come up here: [7 CFR (e)] And anyone who will sign the promissory note, may close an OL loan in no more than seven calendar years, either as an individual or as a member of an entity, except as provided in paragraph (e)(1) through (4) of this section. The years may be consecutive or non-consecutive, and there is no limit on the number of loans closed in a year. Youth loans are not counted toward this limitation. The following exceptions are applicable. [7 CFR (e)(1)] This limitation does not apply if the applicant and anyone who will sign the promissory note is a beginning farmer. The maximum number of years a beginning farmer may receive OL assistance is 10 years.

12 Managerial Ability and Alternatives for Microloan
Applicants for microloans may demonstrate management ability by or through: Education, or On-the-job training, or Farming experience Owner, manager or operator of a farm for at least 1 production cycle, (within last 5 years) or Obtained and successfully repaid one FSA Youth Loan Demonstrate Management Ability Management ability may be demonstrated by: Education 4 year college degree in an Ag related field 2 year degree in Ag related field along with experience in working on a farm Vo-ag classed in high school along with experience working on a farm On-the-Job Training Currently working or recently working on a farm with management responsibilities Farming Experience Owner, manager or operator of a farm business for at least one entire production cycle

13 Alternatives for Meeting Eligibility Requirements For Microloans
Certification of past participation in any one of the following: 4-H FFA Beginning Farmers & Ranchers Dev. Programs Community Based Organizations That demonstrates experience in a related enterprise OR,

14 Alternatives for Meeting Eligibility Requirements For Microloans
Participate in a self-directed apprenticeship combined with either prior sufficient experience working on a farm or significant small business management experience. ML applicant must seek, receive and apply guidance from a qualified person during 1st cycle of production

15 Securing Microloans Collateral for an annual operating purpose, such as purchasing seed, fertilizer and other crop input costs: Generally, secured by the crop or products produced, however equipment or other security can be used. Collateral for loans for other purposes such as purchasing equipment or foundation livestock: Usually secured by the equipment or livestock being purchased. All loans need adequate security. 150% security required on ML made for annual operating expenses, if available. Otherwise 100% security is sufficient. 100% security required on ML made for purchase of equipment or breeding livestock. A lien on non-essential assets does not apply to ML, down payment loans or youth loans.

16 Microloan application requirements
FSA-2330, “Request for Microloan Assistance” Farm Operating Plan Balance Sheet Environmental Information AD-1026, and RD Credit Report Fee Financial and Production records for most recent production cycle if available Credit Report Fee is: Individual $13.50 Joint $20.25 Entity $75.00










26 Reminder: Only the most recent year is required for a MicroloanR
This form is optional. If an applicant has this same information recorded in a similar format. Remember, FSA only needs the most recent year. Three years of records is not required for the microloan.


28 Reminder: Only the most recent year is required for a Microloan
This form is optional. If an applicant has this same information recorded in a similar format. Remember, FSA only needs the most recent year. Three years of records is not required for the microloan.


30 Applying for a Loan You may obtain the forms for a loan application by visiting your local FSA office or from the FSA website at and click on the “Forms” tab FSA loan officers can provide assistance in completing the FSA forms or can identify other sources of assistance in your area. Applications may be submitted by: • calling for an appointment with an FSA loan officer; • mailing, faxing, or delivering your application to your local FSA office; or • electronically submitting your application if you have registered through the e-gov system. For information click on the “Online Services” tab at

31 In Summary: Microloans
Are a direct operating loan with a maximum loan amount of $35,000. Have a shortened application process and reduced paperwork. Allow some applicants that do not currently meet the experience and managerial requirements to qualify through a self-guided mentorship.

32 In Summary: Microloans
Provide some flexibility in loan security; Assist the agricultural community by creating opportunities to start new businesses; Fulfill financial operating needs of beginning, niche and the smallest of family farm operations.

33 Enter contact information of the presenter CONTACT INFORMATION: Eddie Trevino, Farm Loan Chief Telephone:

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