FSA allocates loan funds for socially disadvantaged farmers, ranchers

FSA allocates loan funds for socially disadvantaged farmers, ranchers

The US Department of Agriculture (USDA) Farm Service Agency (FSA) allocates a portion of its farm loan program funds specifically for socially disadvantaged applicants (SD), including minority and women producers.

“FSA farm loans are available to all qualified applicants; but by setting aside funds specifically for minorities and women, the Agency ensures members of these specific groups can receive a portion of available funds – assuming they meet FSA loan eligibility requirements,” said Larry J. Goetze, Farm Loan Manager for Donley County FSA.

By FSA definition, an applicant is considered socially disadvantaged if he or she is a member of a group whose members have been subjected to racial, ethnic, or gender prejudice, without regard to individual qualities.  FSA has identified socially disadvantaged groups as Women, Blacks, American Indians, Alaskan Natives, Hispanics, Asians, and Pacific Islanders.

FSA offers both direct and guaranteed farm loans.  Farm loan funds can be used to purchase farms, livestock, and equipment.  They may also be used to operate a farm, build or repair service buildings, pay for soil and water conservation practices, and in some cases refinance debt.

For direct loans made by FSA to purchase a farm, the terms may extend to 40 years with a current interest rate of 5.5 percent.  Direct operating loans may be made for one to seven years with a current interest rate of 3.5, which is subject to change.

“Applicants requesting direct real estate loans should be aware that funding for this program is limited and may require a waiting period before funds are available and applications approved,” said Goetze.

FSA guaranteed loans are made by banks or other commercial lenders and are guaranteed by FSA for up to 90 percent of any loss.  The guaranteed loan program includes both operating and real estate loan programs.  If a loan applicant is able to obtain financing from a private lender equal to 50 percent or more of the total funds needed to jointly finance the purchase of the farm, the interest rate on the FSA direct loan would be fixed at five percent.

SDA loan applicants do not receive automatic approval. Individuals must be US citizens with a satisfactory history of meeting credit obligations, have sufficient education, training or experience managing or operating a farm, possess the legal capacity to incur debt, and be unable to obtain credit through traditional lending means.