The Farm Service Agency of the United States Department of Agriculture (USDA) mission is to “equitably serve all farmers, ranchers, and agricultural partners through the delivery of effective, efficient agricultural programs for all Americans.” One of the essential ways they support farmers and ranchers is by providing opportunities for financing that can help acquire or expand operations through their farm loan programs.
There are a variety of loan programs available and two primary ways to access:
Direct FSA loans are made by the USDA’s Farm Service Agency, meaning that the government provides the funds to eligible farmers and ranchers. Repayment terms and interest rates for Direct FSA loans differ depending on the specific loan program, the borrower’s financial situation, and the intended use of the funds. The government is taking the risk, and the farmer or rancher is responsible for working directly with them.
Direct FSA loans are used for various agricultural purposes, including:
The farmer submits the application directly to the FSA, who reviews the loan application to determine eligibility.
On the other hand, a Guaranteed Farm Loan is through a USDA-approved lending institution. The lending institution is extending credit to a farmer or ranch who may not typically qualify for credit. The lender is the FSA’s customer. Your lender services the loan, and the FSA guarantees the loan to the bank up to 95%.
FSA loans overall have numerous benefits for you to consider in purchasing land or a farm:
Getting a Guaranteed FSA loan from a First Financial Bank (FFB) has several advantages:
The other advantage of a guaranteed FSA loan is that lenders may offer credit to farmers who may not meet the standard loan criteria for a business loan.
Once you have applied, your lender will keep you notified throughout the process of the loan’s progress. If the loan is approved, your lender closes the loan and disperses the funds.
The USDA determines farm loan requirements:
To qualify for an FSA loan, one of the requirements you must meet is to be a family farm. Some characteristics include:
You can learn more about the overall eligibility requirements here.
It’s essential to have a plan for managing your finances, including repayment of a loan. But how do you estimate what your payments might be on an FSA Guaranteed Loan through FFB? We’ve got you covered with a calculator to estimate your payments at various interest rates. Check it out below.
If you are ready to discuss your plans with us and want to learn more about the loan process, we would be happy to discuss it with you – and then you just may be well on your way to the farm loan that fits your needs.