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6 Things You Need To Know Before Applying for a Farm Loan
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 6 Things You Need To Know Before Applying for a Farm Loan

6 Things You Need To Know Before Applying for a Farm Loan

by FarmAgLoans | Posted on Oct. 25, 2013


As a beginning farmer or an experienced one, there are times that you will need help on borrowing money to start or expand your farmlands. One effective way to do this is to apply for a farm and agricultural loan from Farm Service Agency (FSA) but before applying, consider the following things that you should need to know.


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  1. Why you need a loan

    Getting a farm loan is never easy especially for new farmers and ranchers. First thing you should consider are the reasons for applying a loan. Are you buying or leasing a farm? Do you need to buy farming equipments like tractors or a greenhouse maybe? Did your farm experienced a natural disaster or just want to expand your business? Or you have other farming needs that can only be attain by applying for a loan? If "yes" then you may qualify for a farm loan application.


  2. Types and terms of loan available

    FSA grants different types of farm/agricultural loans for different kinds of needs by farmers. Currently there are 3 types of Loan Program namely: Guaranteed Loan Program, Direct Loan Program and the Land Contract Guarantee Program. From these three loan program there are 9 different types of farm loans with various farm loan rates and terms. For determining the maximum loan limit of the current year, you can check on your local FSA office or at FSA website.


  3. Where to apply for a loan

    Farm Service Agency (FSA) is an agency of U.S. Department of Agriculture (USDA) which provides various Farm Loan Programs for beginner and experienced farmer and ranchers. Know that FSA farm loans are temporary unlike loans from commercial credit. You may submit your loan application to your local FSA loan office.


  1. Documents and requirements that you will need

    There are several documents that you have to provide to a FSA loan officer when applying for a farm loan and they vary depending on the program you are applying. Basically, you will need a resume with complete background and experiences working on other farms and ranches. Lastly, you will provide copies of your income tax returns for the last three years. You also have to meet certain eligibility requirements depending on the loan type you are applying.


  2. Questions the lender may ask you

    During the submission of your application, the FSA loan officer may have set of questions for you to answer. Questions about your income tax and other information on your income statement; if you are a co-signer or guarantor of debts incurred by others are some of the question you have to prepare. They may also ask you about your marketing strategy and farming method and practices. If you have fellow farmers who recently been approved a loan, they could help you a lot with this stage of your application.


  3. Questions to ask to the lender

    You also have to prepare some questions yourself to the lending officer if you want to clarify something, especially the terms of the loans. Ask if there are application fee, appraisal fee, commitment fee or other sort of fees. Prepare your set of questions too, and list down everything the officer's answer. Know all the cost and charges on the application so you can prepare your cash requirements.


For more detailed information, please visit our farm loans resources below:

http://www.fsa.usda.gov/Internet/ FSA_File/fsa_br_01_web_booklet.pdf
http://sfp.ucdavis.edu/pubs/Family _Farm_Series/Farmmanage/finance/
http://www.fsa.usda.gov/FSA/webapp ?area=home&subject=fmlp&topic=bfl
http://www.cfra.org/resources/ Publications/Beg_Farmer _loan_programs.htm

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