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Farm Loan Types - FSA Loans Programs
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 Farm Loan Types - FSA Loans Programs

FSA Loans Programs and Farm Loan Types

by FarmAgLoans | Posted on Oct. 4, 2013


Farm Service Agency (FSA) is an agency of the U.S. Department of Agriculture (USDA) which provides farm and ranch loans through their Farm Loan Programs. Such loans can be used to buy or lease a farm or a ranch, buy farm equipments or a greenhouse, farm expansion and if your farm or ranch experienced natural disasters such as drought, flooding and storm.


FSA Farm Loan Programs are categorized into three, the Guaranteed Loan Program, Direct Loan Program and the Land Contract Guarantee Program.


Guaranteed Loan Program is offered by commercial lenders, by credit unions or by Farm Credit System and FSA guarantees the lender's loan against loss, up to 95%. As of Nov. 22, 2011, FSA no longer accepts application for this program with interest assistance because of the program funding.


Direct Loan Program is serviced by the FSA itself using government money. FSA has the responsibility of providing credit counseling and supervision to the farmers/ranchers by helping them evaluate the adequacy of their real estate and facilities, machinery and equipment, financial and production management, and its goals.


Land Contract Guarantee Program is available to farmers/ranchers who wish to sell real state through a land contract to a beginning or socially disadvantaged farmer or rancher.


There are 9 different types of farm loans from these programs which you can apply depending on your needs. Farm ownership, operating, and conservation loans are available under the Guaranteed Loan Program. Farm ownership, operating, emergency, and conservation loans are available under the Direct Loan Program. While under the Land Contract Guarantee program, there are two types, Prompt Payment Guarantee and Standard Guarantee loans.



Farm Barn

Farm Loan Types Description


The chart below provides additional details for the different types of loans you may acquire from FSA. Maximum loan amount; rates and terms are shown also.

Farm Loan Programs Information Chart

Type of Loan Maximum Loan Amount Rates and Terms
Direct Farm Ownership $300,000
  • Term: Up to 40 years
  • Interest rate: fixed**
Direct Down Payment The lowest of the following:
  • 45% of the farm or ranch purchase price
  • 45% of the appraised value
  • $225,000
  • Term: Up to 20 years
  • Interest rate: fixed**
Direct Operating $300,000
  • Term: 1 to 7 years
  • Interest rate: fixed**
Direct Emergency The lowest of the following:
  • 100% actual or physical losses
  • 45% of the appraised value
  • $500,000
  • Term: 1 to 7 years (possibly up to 20 years) for non-real estate purposes
  • Up to 40 years for physical losses on real estate
  • Interest rate: fixed**
Guaranteed Farm Ownership The maximum loan amount is adjusted annually for inflation*
  • Term: Up to 40 years
  • The interest rate is negotiated by you and your lender.
Guaranteed Operating The maximum loan amount is adjusted annually for inflation*
  • Term: 1 to 7 years
  • The interest rate is negotiated by you and your lender.
Guaranteed Conservation The maximum loan amount is adjusted annually for inflation*
  • Term: Up to 20 years
  • The interest rate is negotiated by you and your lender.
Land Contract Guarantee A maximum purchase price of $500,000 on a new land contract
  • Term: Contract payments must be amortized for a minimum of 20 years with equal payments during the term of the guarantee. The guarantee period is 10 years.
  • Interest rates must be fixed and cannot exceed the direct farm ownership interest rate plus 3 percentage points.


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Reference:
http://www.fsa.usda.gov/Internet/ FSA_File/fsa_br_01_web_booklet.pdf

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