USDA offering farm loans for beginning farmers, underserved groups

Sun Journal | Wednesday, January 4, 2017 at 10:40 am

BANGOR — USDA Maine Farm Service Agency Executive Director Donovan E. Todd III reminds producers that FSA offers targeted farm ownership and farm operating loans to assist underserved applicants, as well as beginning farmers and ranchers.

For farm loan program purposes, targeted underserved groups are women, African Americans, American Indians and Alaskan natives, Hispanics, Asians and Pacific Islanders.

Underserved or beginning farmers and ranchers who cannot obtain commercial credit from a bank can apply for either FSA direct loans or guaranteed loans. Direct loans are made to applicants by FSA. Guaranteed loans are made by lending institutions who arrange for FSA to guarantee the loan. FSA can guarantee up to 95 percent 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 normal underwriting criteria.

“During fiscal year 2016, Maine FSA obligated $5.7 million in loans to assist 88 targeted underserved and beginning producers,” said Todd.

The direct and guaranteed loan program provides for 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 or rights of way needed in the farm’s operation, build or improve buildings, promote soil and water conservation and development 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 successful farm. Operating loan funds can also be used for family living expenses, refinancing debts under certain conditions, paying salaries for hired farm laborers, installing or improving water systems for home, livestock, or irrigation use and other similar improvements.

FSA now offers microloans through the direct loan program. The focus of microloans is on the financing needs of small, beginning farmer, niche and non-traditional farm operations, such as truck farms, farms participating in direct marketing and sales such as farmers markets, community-supported agriculture, restaurants and grocery stores, or those using hydroponic, aquaponic, organic and vertical growing methods. Microloans are available for both ownership and operating finance needs. To learn more, visit www.fsa.usda.gov/microloans.

To qualify as a beginning producer, the individual or entity must meet the eligibility requirements outlined for direct or guaranteed loans. Additionally, individuals and all entity members must have operated a farm for less than 10 years. Applicants must materially or substantially participate in the operation.

For farm ownership purposes, the applicant must not own a farm greater than 30 percent of the average size 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 years out of the last 10 years prior to the date the application is submitted. If the applicant is an entity, all members must be related by blood or marriage and all entity members must be eligible beginning farmers.

FMI: www.fsa.usda.gov/farmloans, offices.usda.gov.