Farm Operating Loans and Loan Guarantees

The Farm Service Agency (FSA) offers direct and guaranteed loans to farmers and ranchers to promote, build, and sustain family farms for a thriving agricultural economy. The goal of FSA’s farm loan program is to provide supervised credit and management assistance to eligible farmers to become owners or operators, or both, of family farms or to continue such operations when credit is not available elsewhere.

General Eligibility for Direct Loans:

The following requirements must be met to qualify for an FSA Direct Operating Loan, unless otherwise stated in the eligibility requirements for the loan:

I. Be a family farmer;
II. Have a satisfactory credit history;
III. Be a citizen of the United States, including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Commonwealth of the Northern Mariana Islands, Republic of Palau, Federated States of Micronesia and the Republic of Marshall Islands; a U.S. non- citizen national or a qualified alien under federal immigration law;
IV. Be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs;
V. Have the legal capacity to incur the obligations of the loan;
VI. Not have outstanding unpaid judgments obtained by the U.S. in any court, excluding judgments filed in U.S. Tax Courts;
VII. Not be delinquent on a federal debt;
VIII. Must not have provided FSA with false or misleading documents or statements in the past;
IX. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years;
X. Not have received debt forgiveness from FSA (certain exceptions apply); and
XI. Be within the time restrictions as to the number of years they can receive FSA assistance.

General Eligibility for Guaranteed Loan Applicants:

An applicant, including members of an entity applicant, must meet the following eligibility criteria to obtain a guaranteed loan:

I. Be a U.S. citizen or legal resident alien which includes Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and certain former Pacific Trust Territories
II. Have an acceptable credit history as determined by the lender
III. Demonstrate ability to repay the loan
IV. Provide sufficient security for the loan
V. Have the legal capacity to incur the obligations of the loan
VI. Be unable to obtain a loan without a guarantee
VII. Have not received FSA debt forgiveness on more than three occasions on or prior to April 4, 1996; or any occasion after April 4, 1996
VIII. Be the owner or tenant operator of a family farm after the loan is closed. For Operating Loans, the applicant must be the operator of a family farm after the loan is closed.
IX. Not be delinquent on any federal debt
X. Not have outstanding unpaid judgments obtained by the U.S. in any court excluding judgments filed in U.S. Tax Courts;
XI. Not have provided FSA with false or misleading documents or statements in the past;
XII. Not have been convicted under federal or state laws of planting, cultivating, growing, producing, harvesting, or storing a controlled substance within the last 5 crop years.

Applications may also be made by entities. Entities are corporations, cooperatives, joint operations, partnerships, trusts, and limited liability companies. Their members/stockholders must meet these same eligibility requirements. The entity must also be authorized to operate a farm or ranch in the state where the land is located. For socially disadvantaged members, they must hold a majority interest in the entity applicant to receive targeted funding.

If a direct or guaranteed loan is approved, FSA will notify the applicant in writing of:
1. the approved use of loan funds
2. the interest rate
3. the term of the loan
4. the collateral that will be required to pledge to
secure the loan
5. when the money is expected to be available
6. any pre-loan closing requirements
7. Responsibilities as an FSA direct loan
borrower.

The applicant will need to sign and return the letter accepting the loan conditions. Loan closing will be scheduled as soon as possible after loan approval. Normally, loan funds are provided within 15 days of approval. If the application for a guarantee is approved, FSA will provide written notification to the lender. FSA receives funding for loans and guarantees on a fiscal year basis, and the demand for some loan types may exceed the level of funding received. When this occurs, a loan can be approved subject to the availability of funding, but it cannot be closed until additional funding is received.

Within 60 calendar days after receiving a complete loan application, the Agency will complete the processing of the Direct loan request and notify the applicant of the decision reached, and the reason for any disapproval.

For guaranteed loans, an EZ, CLP, or PLP loan is approved or rejected within 14 calendar days from date completed application was received. A SEL loan is approved or rejected within 30 calendar days from date completed application was received. Each application is reviewed within 5 calendar days of being received.