How to Get a Farm Operating Loan
What it is
| At a Glance | |
|---|---|
| Loan Type: | Farm |
| Lender: | Government |
| Secured: | Yes |
A farm operating loan is provided through the United States Department of Agriculture Farm Service Agency, or FSA. It makes direct and guaranteed farm ownership and operating loans to family size farmers and ranchers who cannot obtain commercial credit from the bank, Farm Credit System institution, or other lenders.
FSA farm operating loans can be used to purchase land, livestock, equipment, feed, seed, and supplies. These loans can also be used to construct buildings or make farm improvements. The amount of loans delivered through the farm operating loan program is dependent on the status of the farmer. Farmers can be approved for amounts up to $200,000 with repayment plans anywhere from one to seven years at rates lower than those offered by commercial lenders.
Who it's for
Farmers aren't always able to be economically stable. Their success is dependent on a variety of uncontrollable factors, including the weather, water conditions and natural disaster. That's why sometimes extra funding can be very important to farmer's whose livelihood depends on livestock and land. FSA loans are provided to beginning farmers who cannot qualify for conventional loans because they do not have sufficient financial resources. FSA also helps established farmers who have suffered financial setbacks from natural disasters, or whose resources are too limited to maintain profitable farming operations.
What you need to do to apply
In order to be approved for a farm operating loan, a farmer must provide information about economic and financial need, demonstrate that they are having difficult obtaining commercial lending elsewhere, show willingness to repay, and produce collateral. People interested in obtaining a farm operating loan are encouraged to visit a local USDA office or service centre to learn more about this program and others, as well as receive essential information for completing the loan application.
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