Loans for Beginning Farmers and Ranchers
The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) makes and guarantees loans to beginning farmers who are unable to obtain financing from commercial lenders. Each fiscal year, FSA targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers.
Do You Qualify?
A beginning farmer is an individual or entity who:
- Has not operated a farm for more than 10 years;
- Meets the loan eligibility requirements of the program to which he/she is applying;
- Substantially participates in the operation and;
- Does not own a farm or ranch greater than 30 percent of the average size farm in the county
(Note: All applicants for direct FO loans must have participated in the business operations of a farm for at least three years of the ten years prior to the date the application is submitted.)
If the applicant is an entity, all members must be related by blood or marriage, and all entity members must be eligible beginning farmers.
Maximum Loan Amounts
- Direct FO: $300,000
- Direct OL: $300,000; Microloan: $50,000
- Guaranteed FO or OL: $2,343,000 (Amount varies annually based on inflation)
Down Payment Program
FSA has a special loan program to assist socially disadvantaged (SDA) and beginning farmers in purchasing a farm. Retiring farmers may use this program to transfer their land to future generations.
To qualify:
- The applicant must make a cash down payment of at least 5 percent of the purchase price.
- The maximum loan amount does not exceed 45 percent of the least of:
a) the purchase price of the farm to be acquired;
b) the appraised value of the farm to be acquire; or
c) $667,000 (Note: This results in a maximum loan amount of $300,150.) - The term of the loan is 20 years. The interest rate is 4 percent below the direct FO rate, but not lower than 1.5 percent.
- The remaining balance may be obtained from commercial lender or private party. FSA can provide up to a 95 percent guarantee if financing is obtained from a commercial lender. Participating lenders do not have to pay a guarantee fee.
- Financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan.
Joint Financing Arrangement
Beginning farmers may choose to participate in a joint financing arrangement. With this arrangement, FSA lends up to 50 percent of the amount financed, and another lender provides 50 percent or more. The applicant will use funds from the joint financing arrangement along with FSA funds for any authorized FO purpose. The interest rate is 2 percent less than the direct FO rate but not lower than 2.5 percent. The term of the loan will not exceed 40 years or the useful life of the security.
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The U.S. Department of Agriculture (USDA) prohibits discrimination against its customers, employees and applicants for employment on the bases of race, color, national origin, age, disability, sex, gender identity, religion, reprisal and, where applicable, political beliefs, marital status, familial or parental status, sexual orientation or all or part of an individual's income is derived from any public assistance program, or protected genetic information in employment or in any program or activity conducted or funded by the Department. (Not all prohibited activities will apply to all programs and/or employment activities.) Persons with disabilities who wish to file a program complaint, write to teh address below or if you require alternative means of communication for program information (e.g., Braille, large print, audiotape, etc.) please contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). Individuals who are deaf, hard of hearing or have speech disabilities and wish to file either an EEO or program complaint, please contact USDA through the Federal Relay Service at (800) 877-8339 or (800) 845-6136 (in Spanish).
If you wish to file a Civil Rights program complain of discrimination, complete the USDA Program Discrimination Complaint Form, found online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any USDA office, or call (866) 632-9992 to request the form. You may also write a letter containing all of the information requested in the form. Send your completed complaint form or letter by mail to U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, by fax at (202) 690-7442 or email at program.intake@usda.gov.
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