Loans available for underserved beginning farmers | Community News

Diane Drabish of the USDA Agricultural Service Agency serving Adams, Cumberland, Franklin, Fulton and York counties reminded growers that the FSA has funding set aside specifically for use by targeted underserved groups and loans to beginning farmers.

These loan programs are designed to help farmers purchase and operate family farms, according to a statement from the Adams County Farm Service Agency.

“With these loan programs, the FSA hopes to help reverse the declining number of farmers and ranchers across the United States and especially here in Adams, Cumberland, Franklin, Fulton and York counties,” said said Drabish. “These loans encourage and help them own and operate their own farms and ranches, participate in agricultural programs, and become an integral part of the farming community.”

The FSA sets aside a portion of its loan funds for targeted underserved groups each year. The USDA defines a targeted underserved farmer as part of a group whose members have been subjected to racial, ethnic, or gender bias based on their identity as members of the group without regard to their individual qualities, according to Drabish. For the purposes of this program, the targeted underserved groups are women, African Americans, American Indians and Alaska Natives, Hispanics, Asians, and Pacific Islanders.

According to the release, direct loans are made to applicants by the FSA and include both operating and farm property loans.

Repayment terms for direct operating loans depend on the collateral backing the loan and generally range from one to seven years.

Repayment terms for direct ownership loans can be up to 40 years, Drabish said. Interest rates for direct loans are set periodically based on the government’s cost of borrowing.

“The Installment Loan Program requires the applicant to provide a minimum 5% down payment in cash, then the loan cannot exceed 45% of the lesser of the purchase price, the appraised value of the farm to be acquired, or 667 $000.00; subject to $600,000.00 direct farm property loan limit. Installment loans issued as micro-loans for FO purposes cannot exceed $50,000.00,” the statement read.

Farm property loan funds can be used to purchase or expand a farm, purchase easements or rights of way necessary to operate the farm, erect or improve buildings such as a dwelling or barn, promote soil and water conservation and development and pay closing costs, according to the statement.

“Farm business loan funds can be used to purchase livestock, poultry, farm and household equipment, feed, seeds, fuel, fertilizers, chemicals, refinance debts , hail and other crop insurance, food, clothing, medical care and hired labor. Funds may also be used to install or improve water systems for domestic use, for livestock or irrigation, and other improvements,” the statement read.

Individuals, partnerships, joint ventures, corporations and cooperatives primarily and directly engaged in agriculture and animal husbandry on family farms can apply, according to the release. A family-sized farm is considered a farm that a family can operate and manage on their own.

Secured loans can also be made for ownership or operating purposes and can be made by a lending institution subject to federal or state supervision (banks, savings and loans, insurance companies and units of the agricultural credit system ), according to the press release.

Typically, the FSA guarantees 90 or 95% of a loan against any loss that might be incurred if the loan fails. The terms of the secured loan are set by the lender, according to the release. Interest rates for secured loans are set by the lender.

Applicants must meet the eligibility criteria for a given program before the FSA can extend program benefits. For more information or applications for all FSA direct loan programs, contact your local FSA office.

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