Farm Ownership Loans and Loan Guarantees

The Farm Service Agency (FSA) offers direct and guaranteed loans to farmers and ranchers to promote, build, and sustain family farms for a thriving agricultural economy. The goal of FSA's farm loan program is to provide supervised credit and manageme

To assist farmers and ranchers become owner-operators of family farms, improve and expand current operations, increase agricultural productivity, and assist with land tenure to save farmland for future generations.

General Eligibility for Direct Farm Ownership Loans: The following requirements must be met to qualify for an FSA Direct Farm Ownership Loan, unless otherwise stated in the eligibility requirements for the loan: I. Be a family farmer; II. Have a satisfactory credit history; III. Be a citizen of the United States, including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Commonwealth of the Northern Mariana Islands, Republic of Palau, Federated States of Micronesia and the Republic of Marshall Islands; a U.S. non- citizen national or a qualified alien under federal immigration law; IV. Be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs; V. Have the legal capacity to incur the obligations of the loan; VI. Not have outstanding unpaid judgments obtained by the U.S. in any court, excluding judgments filed in U.S. Tax Courts; VII. Not be delinquent on a federal debt; VIII. Must not have provided FSA with false or misleading documents or statements in the past; IX. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years; X. Not have received debt forgiveness from FSA (certain exceptions apply); and XI. Be within the time restrictions as to the number of years they can receive FSA assistance. General Eligibility for Guaranteed Loan Applicants: An applicant, including members of an entity applicant, must meet the following eligibility criteria to obtain a guaranteed loan: I. Be a U.S. citizen or legal resident alien which includes Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and certain former Pacific Trust Territories II. Have an acceptable credit history as determined by the lender III. Demonstrate ability to repay the loan IV. Provide sufficient security for the loan V. Have the legal capacity to incur the obligations of the loan VI. Be unable to obtain a loan without a guarantee VII. Have not received FSA debt forgiveness on more than three occasions on or prior to April 4, 1996; or any occasion after April 4, 1996 VIII. Be the owner or tenant operator of a family farm after the loan is closed. For Operating Loans, the applicant must be the operator of a family farm after the loan is closed. IX. Not be delinquent on any federal debt X. Not have outstanding unpaid judgments obtained by the U.S. in any court excluding judgments filed in U.S. Tax Courts; XI. Not have provided FSA with false or misleading documents or statements in the past; XIII. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years. Applications may also be made by entities. Entities are corporations, cooperatives, joint operations, partnerships, trusts, and limited liability companies. Their members/stockholders must meet these same eligibility requirements. The entity must also be authorized to operate a farm or ranch in the state where the land is located. For socially disadvantages members, they must hold a majority interest in the entity applicant to receive targeted funding.

Individual/Entity, Socially Disadvantaged Applicants(SDA)/Non-SDA; SDA applicant or farmer is an individual or entity who is a member of a socially disadvantaged group. SDA group is a group whose members have been subject to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities. These groups consist of: American Indians or Alaskan Natives, Asians, Blacks or African Americans, Native Hawaiians or other Pacific Islanders, Hispanics, and women.

The operation must be an eligible farm enterprise. Farm Ownership loan funds cannot be used to finance nonfarm enterprises, such as exotic birds, tropical fish, dogs or horses used for non-farm purposes (racing, pleasure, show and boarding). Direct Farm Ownership Loan funds may be used to: I. Buy a farm or ranch; II, Enlarge an existing farm or ranch; III. Make a down payment on a farm; IV. Purchase of easements; V. Construct, purchase or improve farm swellings, service buildings or other facilities and improvements essential to the farming operation; VI. Promote soil and water conservation and protection; VII. Pay loan closing costs VIII. Refinance a bridge loan Guaranteed farm ownership loans are authorized only to: (1) Acquire or enlarge a farm (2) Make capital improvements; (3) Promote soil and water conservation and protection; (4) Pay closing costs, including but not limited to, purchasing stock in a cooperative, appraisal and survey fees; (5) Refinance indebtedness incurred for authorized FO or OL purposes, provided the lender and applicant demonstrate the need to refinance the debt.

Use Restrictions are same as Use of Assistance above.

The repayment of all Direct and Guaranteed Farm Ownership loan is based on the applicant's ability to repay and the useful life of the security. In no event will the term be more than 40 years from the date of the note.

Preapplication coordination is not applicable. No loan will be made until all Federal and state statutory and regulatory environmental requirements have been complied.

If a direct or guaranteed farm ownership loan is approved, FSA will notify the applicant in writing of: 1. the approved use of loan funds 2. the interest rate 3. the term of the loan 4. the collateral that will be required to pledge to secure the loan 5. when the money is expected to be available 6. any pre-loan closing requirements 7. Responsibilities as an FSA direct loan borrower. The applicant will need to sign and return the letter accepting the loan conditions. Loan closing will be scheduled as soon as possible after loan approval. Normally, loan funds are provided within 15 days of approval. If the application for a guarantee is approved, FSA will provide written notification to the lender. FSA receives funding for loans and guarantees on a fiscal year basis, and the demand for some loan types may exceed the level of funding received. When this occurs, a loan can be approved subject to the availability of funding, but it cannot be closed until additional funding is received.

Within 60 calendar days after receiving a complete loan application, the Agency will complete the processing of the Direct loan request and notify the applicant of the decision reached, and the reason for any disapproval. For guaranteed loans, an EZ, CLP, or PLP loan is approved or rejected within 14 calendar days after completed application is received. A SEL loan is approved or rejected within 30 calendar days after completed application is received. Each application is reviewed within 5 calendar days of being received.

Applicants may reapply for an FSA loan at any time. Applicants who were given a denial of a loan request will be advised of potential actions or alternatives that might resolve or help resolve the issues that resulted in the denial of the loan request. Applicants previously given a loan denial must establish that substantial change has occurred, since the denial decision.

FLP applicants and borrowers have the right to request reconsideration, file appeals, and enter alternate dispute resolutions about adverse decisions. If a loan is not approved, FSA will provide written notification of reasons for non approval and the opportunities to request reconsideration, mediation or appeal. Applicants are provided with the opportunity to meet with the FSA loan officer to present additional information and explain why you believe FSA's decision may be in error. Mediation as broadly defined is a process for resolution of a disagreement. A trained neutral mediator will assists two or more parties who disagreed by reviewing the issues, consider all available options, and attemptto agree on an acceptable solution. Appeals are handled through the Department of Agriculture National Appeal Division (NAD), an independent organization within USDA, where you may present evidence which demonstrates why you believe that FSA's decision may be wrong.