USDA offers farm loans for beginning farmers

SPOKANE VALLEY, WASH. — The U.S. Department of Agriculture’s Farm Service Agency offers farm ownership and farm operating loans to beginning farmers and ranchers. Beginning farmers and ranchers who cannot obtain commercial credit from a bank can apply for FSA direct or guaranteed loans.

Qualified beginning farmers, are individuals or entities that meet the eligibility requirements for direct or guaranteed loans. Individuals and all entity members must have operated a farm for less than 10 years. They must materially or substantially participate in the operation. For farm ownership, the applicant must not own a farm greater than thirty percent of the average-sized farm in the county at the time of application.

All direct farm ownership applicants must have participated in the business operations of a farm for at least three out of 10 years before the date of submission to the FSA. Substitute qualifications are available for up to the full three years of experience based on education, military experience, participation with a SCORE mentor, and hired farm management experience. Local FSA offices can provide more details on acceptable substitutions.

Direct loans are made by the FSA. Guaranteed loans are made by lending institutions that arrange for FSA to guarantee the loan. FSA can guarantee up to 95% of the loss of principal and interest on a loan. The FSA guarantee allows lenders to make agricultural credit available to producers who do not meet the lender’s standard underwriting criteria.

The direct and guaranteed loan program offers two types of loans: farm ownership loans and farm operating loans.

Farm ownership loan funds may be used to purchase or enlarge a farm or ranch, purchase easements, build or improve buildings, and pay closing costs.

Farm operating loan funds may be used to purchase livestock, poultry, farm equipment, fertilizer, and other materials necessary to operate a farm. They can also be used for expenses including, family living, refinancing, farm laborer salaries, and improvements.

For more information on FSA’s farm loan programs and beginning farmer guidelines, please contact your local FSA office or visit farmers.gov.