Overview
Building a successful farm is a significant financial
investment and can be especially challenging for
beginning farmers who are not financially ready to
access credit from commercial lenders. The U.S.
Department of Agriculture’s (USDA) Farm Service
Agency (FSA) makes and guarantees loans to
beginning farmers. While FSA is fully committed to
all farmers and ranchers, there is a special focus on the
credit needs of farmers and ranchers who are in their
first 10 years of operation.
Each year Congress targets a percentage of farm
ownership and farm operating loan funds to beginning
farmers. Providing loan programs is important as
beginning farmers have historically experienced more
difficulties obtaining financial assistance.
A beginning farmer is an individual or entity who:
•
Has not operated a farm for more than 10 years;
•
Substantially participates in the operation;
•
For farm ownership loans, the applicant cannot
own a farm greater than 30 percent of the average
size farm in the county, at time of application.
•
If the applicant is an entity, all members must
be related by blood or marriage, and all entity
members must be eligible beginning farmers.
In addition, beginning farmers must meet the loan
eligibility requirements for the program.
Maximum Loan Amounts
•
Direct farm ownership: $600,000
•
Direct operating loan: $400,000
•
Microloan: $50,000 each for operating and farm
ownership
•
Guaranteed farm ownership or operating loan:
$1,776,000
•
EZ Guarantee: $100,000 ($50,000 if the lender is a
micro lender)
Down Payment Program
FSA has a special loan program to assist beginning
farmers in purchasing a farm. Retiring farmers may
use this program to transfer their land to future
generations.
Requirements:
•
Cash down payment of at least 5 percent of the
purchase price.
•
Loan amount limited to 45 percent of the least of:
•
The purchase price of the farm;
•
The appraised value of the farm; or
•
$667,000 ($300,150 maximum).
Loans for Beginning
Farmers and Ranchers