Farm Storage Facility Loans

The Farm Storage Facility Loan (FSFL) Program provides low-interest financing for producers to build, upgrade, or acquire farm storage and handling facilities, storage and handling equipment and trucks. The following commodities are eligible for on-f

FSFL provides low-interest financing so producers can build or upgrade permanent and portable storage facilities and equipment for eligible commodities.

An eligible FSFL borrower is any person who, as landowner, landlord, operator, producer, tenant, leaseholder, or sharecropper: (1) Has a satisfactory credit history and demonstrates an ability to repay the debt arising under this program using a financial statement acceptable to CCC prepared within 90 days of the date of application; (2) has no delinquent Federal debt defined by the Debt Collection Improvement Act of 1996 at the time of loan disbursement; (3) is a producer of a facility loan commodity as defined by CCC; (4) demonstrates a need for storage capacity as defined by CCC; (5) provides proof of crop insurance offered under the Federal Crop Insurance Program for crops of economic significance on all farms operated by the borrower in the county where the storage facility is located; (6) is in compliance with USDA provisions for highly erodible land and wetlands provisions according to 7 CFR Part 12; (7) demonstrates compliance with any applicable local zoning, land use, and building codes for the applicable farm storage facility structures; (8) provides proof of flood insurance if CCC determines such insurance is necessary to protect the interests of CCC, and proof of all peril structural insurance, to CCC annually; (9) demonstrates compliance with the National Environmental Policy Act regulations at 40 CFR, Parts 1500- 1508; and (10) has not been convicted under Federal or State law of a controlled substance violation under 7 CFR Part 718.

Applicants/borrowers are the direct beneficiaries when they meet all eligibility criteria. Landowners, landlords, operators, producers, tenants, leaseholders, or sharecroppers are the beneficiaries.

A FSFL is used to finance the purchase, construction, and/or upgrade of storage structures, storage and handling equipment and trucks--all eligible items may be new or used, permanently affixed or portable. The loan amount is limited to $500,000 per storage facility for a regular loan and a $50,000 aggregate balance for microloans. Eligible facilities and equipment include: 1) conventional type bins or silos; 2) flat-type storage structures, including a permanent concrete floor and bulkheads; 3) storage structures; 4) electrical equipment; and 5) concrete foundations, aprons, pits and pads, including site preparation, labor and material. The following are security requirements for farm storage facility loans: All loans must be secured by a promissory note and security agreement, as well as a UCC-1 describing the storage facility and accompanying equipment; and severance agreements from all lien holders on the real estate where the facility will be located or from owners of real estate when the loan applicant is not the landowner, except when CCC holds the first lien on the real estate. For loans with an aggregate outstanding loan balance less than $100,000, severance agreements will not be required if the borrower increases the down payment from 15 percent to 20 percent. For loans that exceed $100,000 or the borrower's aggregate outstanding loan balance exceeds $100,000, the borrower must be able to provide at least one of the following: A first lien on the real estate on which the facility is located; Real estate owned by the borrower other than where the facility is located, provided the real estate offered is sufficient to secure the loan; or An irrevocable letter of credit from a financial institution in an amount sufficient to protect CCC's interest for each year the loan has an outstanding balance. Facility Loan Terms. The following are the terms for farm storage facility loans: A 15 percent minimum down payment is required for regular loans and 5 percent for microloans; thus, CCC's loan is limited to 85 percent (for regular loans), or 95 percent (for microloans), of the net cost of the eligible storage facility and drying and handling equipment (subject to the applicant's storage needs test). The down payment cannot include any trade-in, discount, rebate, deferred payment, or post-dated check. Loan terms available are three (3), five (5), seven (7) years, ten (10) years or twelve (12) years depending on the amount of the loan. Interest rate is fixed for the loan term based on the rate in effect during the month the loan is initially approved. The interest rate is equivalent to the rate of interest charged on Treasury Securities of comparable term and maturity. Loans are to be repaid in equal amortized annual installments. Loan will not be disbursed until after the purchase or the facility has been erected and inspected with the exception of one (1) qualifying partial disbursement, once 50 percent of the facility has been completed at a maximum amount of 50 percent of the approved loan amount, not to exceed $250,000. Cost of Obtaining a Loan. Each applicant will be charged a nonrefundable $100 application fee. CCC will pay all collateral lien searches and recording fees for filing Form UCC-1 and credit reports. Applicants pay all other fees, such as severance agreements, attorney fees, real estate lien search fees, and instrument filing fees. For loans that require additional security and/or are greater than $50,000, applicants will be required to pay the cost of obtaining a title search/opinion or title insurance. Persons Required to Sign the Note. The following persons are required to sign the loan agreement: For sole proprietorships and joint ventures, and all individuals, if applicable. For general partnerships, any member unless the Articles of Partnership are more restrictive. For corporations and limited partnerships, an individual with signature authority on file with FSA.

There are no restrictions placed on the time permitted to spend the money awarded.

No additional information.

FSA State and County Committees are authorized to approve a FSFL after applicants are determined eligible

The approval process may take from 2 to 6 weeks.

The loan term is 3, 5, 7, 10, or 12 years. The term of the loan may be extended only as an authorized exception. The loan is repaid in equal annual installments of principal and interest amortized over the loan term.

Applicants for loans may appeal adverse actions taken against them. The applicant is given an opportunity to appeal the decision to the National Appeals Division. Appeal regulations are set forth in parts 11 and 789 of 7CFR.