Farm Service Agency offers direct and guaranteed farm ownership and operating loans to farmers who are temporarily unable to obtain private, commercial credit. Often, FSA borrowers are beginning farmers who can't qualify for conventional loans because they have insufficient financial resources. The Agency also helps established farmers who have suffered financial setbacks from natural disasters, or whose resources are too limited to maintain profitable farming operations. Under the guaranteed loan program, FSA guarantees loans made by conventional agricultural lenders for up to 95 percent of the principal loan amount. The lender is responsible for servicing the borrower's account for the life of the loan. All loans must meet certain qualifying criteria to be eligible for guarantees, and FSA has the right and responsibility to monitor the lender's servicing activities. Farmers interested in guaranteed loans must apply to a conventional lender, which then arranges for the FSA guarantee.

Applicants unable to qualify for a guaranteed loan may be eligible for a direct loan from FSA. Direct loans are made and serviced by FSA officials, who also provide borrowers with supervision and credit counseling. Funding for direct loans is limited, and applicants sometimes have to wait for funds to become available. To qualify for a direct farm ownership or operating loan, the applicant must be able to show sufficient repayment ability and pledge enough collateral to fully secure the loan.

How Does The Program Work? 

The program works through Targeted Farm Ownership Loan Funds and Regular Farm Ownership Loan Funds that are set aside for the state to issue loans in designated counties. The amount allocated is based on the percentage of disadvantaged persons in the rural population. The program is for the purchase, improvement, or enlargement of farms and its loan funds can be used to: 

• construct, improve, or repair farm homes and farm service buildings;

• drill wells and otherwise improve on farm water supplies;

• install pollution control measures;

• develop energy conservation measures;

• refinance debts;

• develop and improve farmland, such as clearing, leveling, draining and other practices.

What Are The Terms And Interest Rates? 

Loans to limited resource borrowers will be reviewed each year and the interest rate increases if the borrower has sufficient repayment ability. However, if at any time the borrower has sufficient income and repayment ability to pay the current rate that is being charged, the borrower’s interest rate will increase to the current rate. 

Who Can Borrow? 

Persons who are primarily and directly engaged in farming and ranching on family-size operations may be eligible to borrow. 

Eligibility requirements are: 

1. to be a citizen of the United States (or a legal resident alien).

2. to have sufficient education, training or experience in managing or operating a farm or ranch (within the last five (5) years).

3. to have a satisfactory history of meeting credit obligations.

4. to possess the legal capacity to incur the obligations of a loan or credit sale.

• Partners holding a majority interest must meet these same eligibility requirements. * If the individuals holding a majority interest in the entity are related by blood or marriage, at least one stockholder, member, or partner must operate the family farm. If not related by blood or marriage, those members, stockholders, partners, or joint operators holding a majority interest in the entity must own and operate the farm.

Where To Apply For A Loan :

Contact the FSA county office located near the property area for an insured farm ownership loan or credit sale/lease of an inventory farm. If assistance cannot be reached within your local telephone directory list under U.S. Department of Agriculture, Washington, D.C. 20250. 

What Security Is Required? 

Each loan and credit sale will be adequately secured by real estate to protect the interest of the borrower and the government.

* The maximum outstanding principal balance for an insured loan or credit sale is $200,000. Also, a farm ownership loan may not exceed the market value of the farm or other security.

Small Loan Programs :

FARM OWNERSHIP LOANS FOR SOCIALLY DISADVANTAGED PERSONS. 

The FSA Technical Assistance Program at Alcorn State University is charged with the responsibility of providing assistance to farmers and other individuals or groups interested in social disadvantage farm ownership programs. Alcorn State University, through an agreement with FSA has employed personnel who are responsible for providing technical assistance to interested applicants. 

The Farmers Home Administration (FSA) is authorized by the Agricultural Credit Act of 1987 (Public Law No. 100-233) to set aside funds for farm ownership loans to eligible members of socially disadvantaged groups such as: Black Americans, Indians, Alaskan Natives, Hispanics, and Asian or Pacific Islanders; who will operate family size farms. 

The Socially Disadvantaged Outreach Farm Ownership Program serves the following purposes: 

1. To make FSA farm ownership funds and farmland in the possession of FSA more available to the socially disadvantaged.

2. To discover and remove obstacles that prevent their full participation in FSA’s farm ownership loan program.

3. To provide necessary technical assistance in applying for the loans and in developing sound farm management practices.