Farm Loans

Business Financing

Farm Loans

The U.S. Farm Service Agency (FSA) administers and manages farm commodity, credit, conservation, disaster and loan programs through a network of federal, state and county offices. The following resources describe farm loan programs provided by FSA.

State agricultural agencies and local non-profits also provide farm loans. Use our Loans and Grants Search Tool to find federal, state and local farm loan programs for which you may qualify.

Loan Programs

  • Beginning Farms and Ranchers Loans
    Direct and guaranteed loans to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources.
  • The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources. Each fiscal year, the Agency targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers and ranchers.
    A beginning farmer or rancher is an individual or entity who (1) has not operated a farm or ranch for more than 10 years; (2) meets the loan eligibility requirements of the program to which he/she is applying; (3) substantially participates in the operation; and, (4) for FO loan purposes, does not own a farm greater than 30 percent of the median size farm in the county. (Note: all applicants for direct FO loans must have participated in business operation of a farm for at least 3 years.) If the applicant is an entity, all members must be related by blood or marriage, and all stockholders in a corporation must be eligible beginning farmers

  • Commodity Loans / Marketing Assistance Loans
    Marketing assistance loans provide producers interim financing at harvest time to meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows
  • Non-Recourse Marketing Assistance Loan
    Marketing assistance loans provide producers interim financing at harvest time to meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows. Allowing producers to store production at harvest facilitates more orderly marketing of commodities throughout the year.
    Marketing assistance loans for covered commodities are non-recourse because the commodity is pledged as loan collateral and producers have the option of delivering the pledged collateral to the Commodity Credit Corporation (CCC) in satisfaction of the repayment of the outstanding loan for the loan at maturity. A settlement value is determined and applied to the outstanding loan principal and interest.
    Market loan repayment provisions specify, under certain circumstances, that producers may repay loans at less than principal plus accrued interest and other charges. Alternatively, loan deficiency payment (LDP) provisions specify that, in lieu of securing a loan, producers may be eligible for an LDP. For ELS cotton, LDP provisions do not apply and ELS cotton marketing assistance loans must be repaid at the loan rate plus interest.

    Recourse Marketing Assistance Loan
    Recourse loans must be repaid at principal plus interest. The recourse loan commodity cannot be delivered or forfeited in satisfaction of the outstanding loan.

    Marketing Assistance Loan and LDP Eligibility
    For a commodity to be eligible for a marketing assistance loan or a loan deficiency payment (LDP), the producer must have beneficial interest in the commodity in addition to other eligibility requirements.

  • Direct Farm Loans
    Loan programs for starting and operating farms and other agricultural businesses.
  • "Direct" farm loans are made by FSA with Government funds. We also service these loans and provide our Direct loan customers with supervision and credit counseling so they have a better chance for success. Farm Ownership, Operating, Emergency and Youth loans are the main types of loans available under the Direct program. Direct loan funds are also set aside each year for loans to minority applicants and beginning farmers

  • Emergency Farm Loans
    Emergency loans to help producers recover from production and physical losses due to drought, flooding, other natural disasters, or quarantine.
  • USDA's Farm Service Agency (FSA) provides emergency loans to help producers recover from production and physical losses due to drought, flooding, other natural disasters, or quarantine.

    Loan Uses
    Emergency loan funds may be used to:
    • Restore or replace essential property;
    • Pay all or part of production costs associated with the disaster year;
    • Pay essential family living expenses;
    • Reorganize the farming operation; and
    • Refinance certain debts.

    Eligibility
    Emergency loans may be made to farmers and ranchers who:
    • Own or operate land located in a county declared by the President as a disaster area or designated by the Secretary of Agriculture as a disaster area or quarantine area (for physical losses only, the FSA Administrator may authorize emergency loan assistance);
    • Are established family farm operators and have sufficient farming or ranching experience;
    • Are citizens or permanent residents of the United States;
    • Have suffered at least a 30-percent loss in crop production or a physical loss to livestock, livestock products, real estate, or chattel property;
    • Have an acceptable credit history;
    • Are unable to receive credit from commercial sources;
    • Can provide collateral to secure the loan; and
    • Have repayment ability.

    Loan Requirements
    FSA loan requirements are different from those of other lenders. Some of the more significant differences are the following:
    • Borrowers must keep acceptable farm records;
    • Borrowers must operate in accordance with a farm plan they develop and agree to with local FSA staff; and
    • Borrowers may be required to participate in a financial management-training program and obtain crop insurance.

    Collateral is Required
    All emergency loans must be fully collateralized. The specific type of collateral may vary depending on the loan purpose, repayment ability and the individual circumstances of the applicant. If applicants cannot provide adequate collateral, their repayment ability may be considered as collateral to secure the loan. A first lien is required on property or products acquired, produced, or refinanced with loan funds.
    Loan Limit
    Producers can borrow up to 100 percent of actual production or physical losses, to a maximum amount of $500,000.

    Loan Terms
    Loans for crop, livestock, and non-real estate losses are normally repaid within 1 to 7 years; depending on the loan purpose, repayment ability, and collateral available as loan security. In special circumstances, terms of up to 20 years may be authorized. Loans for physical losses to real estate are normally repaid within 30 years. In certain circumstances, repayment may be made over a maximum of 40 years.

    Interest Rate
    The current annual interest rate for emergency loans is 3.75 percent.

    Application Deadline
    Applications for emergency loans must be received within 8 months of the county's disaster or quarantine designation date.

    Temporary Assistance
    Borrowers who receive temporary assistance are expected to return to conventional credit sources. Emergency loans are a temporary source of credit, and borrowers are reviewed periodically to determine whether they can return to commercial credit.

  • Farm Storage Facility Loan Program
    Provides low-interest financing for producers to build or upgrade farm storage and handling facilities.

  • The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Farm Storage Facility Loan Program (FSFL) provides low-interest financing for producers to build or upgrade farm storage and handling facilities. The FSA is authorized to implement the program through USDA's Commodity Credit Corporation (CCC).

    Click here to view the fact sheet on the Farm Storage Facility Loan Program. The FSFL Fact Sheet contains information regarding:
    • eligible facilities and cost items
    • eligibility requirements
    • security requirements
    • Facility Loan Terms
    • Other pertinent information on the FSFL Program Where to File the Application

    Application Form
    CCC-0185 - Loan Application and Approval for Farm Storage and Drying Equipment Loan Program

    Final Rule
    SUMMARY: This rule finalizes an interim rule implementing the Commodity Credit Corporation's (CCC) Farm Storage Facility Loan Program (FSFLP). The program provides financing for producers to build or upgrade farm storage and handling facilities. On the basis of the comments and suggestions received, CCC is making several changes to the program provisions in the interim rule and is adding other provisions.
  • Guaranteed Farm Loans
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  • FSA guaranteed loans provide lenders (e.g., banks, Farm Credit System institutions, credit unions) with a guarantee of up to 95 percent of the loss of principal and interest on a loan. Farmers and ranchers apply to an agricultural lender, which then arranges for the guarantee. The FSA guarantee permits lenders to make agricultural credit available to farmers who do not meet the lender's normal underwriting criteria.
    FSA guaranteed loans are for both Farm Ownership and Operating purposes. Like the Direct Loan Program, a percentage of Guaranteed Loan funds are targeted to beginning farmers and ranchers and minority applicants.

  • Rural Business and Industry Guaranteed Loans
    Loans aimed at improving economic and environmental climate in rural communities. Funds may be used for buying a business to keep it from closing; purchasing land, buildings, machinery or equipment; and related activities.

    The purpose of the B&I Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities. This purpose is achieved by bolstering the existing private credit structure through the guarantee of quality loans which will provide lasting community benefits. It is not intended that the guarantee authority will be used for marginal or substandard loans or for relief of lenders having such loans.

    How does the B&I Guaranteed Loan Program compare to the Rural Energy for America Program Guaranteed Loan and Grant?
    To assist you in determining which program best fit your needs this comparison chart identifies the programs common and distinct requirements in an easy to read format.

    Who May Borrow?
    A borrower may be a cooperative organization, corporation, partnership, or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe on a Federal or State reservation or other Federally recognized tribal group; a public body; or an individual. A borrower must be engaged in or proposing to engage in a business that will:

    1. Provide employment;
    2. Improve the economic or environmental climate;
    3. Promote the conservation, development, and use of water for aquaculture; or
    4. Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems.
    Individual borrowers must be citizens of the United States (U.S.) or reside in the U.S. after being legally admitted for permanent residence. Corporations or other nonpublic body organization-type borrowers must be at least 51 percent owned by persons who are either citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence. B&I loans are normally available in rural areas, which include all areas other than cities or towns of more than 50,000 people and the contiguous and adjacent urbanized area of such cities or towns.

    How May Funds be Used?
    Loan purposes must be consistent with the general purpose contained in the regulation. They include but are not limited to the following:
    1. Business and industrial acquisitions when the loan will keep the business from closing, prevent the loss of employment opportunities, or provide expanded job opportunities.
    2. Business conversion, enlargement, repair, modernization, or development.
    3. Purchase and development of land, easements, rights-of-way, buildings, or facilities.
    4. Purchase of equipment, leasehold improvements, machinery, supplies, or inventory.
    What is the percentage of Guarantee?
    The percentage of guarantee, up to the maximum allowed, is a matter of negotiation between the lender and the Agency. The maximum percentage of guarantee is 80 percent for loans of $5 million or less, 70 percent for loans between $5 and $10 million, and 60 percent for loans exceeding $10 million.

    What are the Loan Amounts?
    The total amount of Agency loans to one borrower must not exceed $10 million. The Administrator may, at the Administrator’s discretion, grant an exception to the $10 million limit for loans of $25 million under certain circumstances. The Secretary may approve guaranteed loans in excess of $25 million, up to $40 million, for rural cooperative organizations that process value-added agricultural commodities.

    What are the Loan Terms?
    The maximum repayment for loans on real estate will not exceed 30 years; machinery and equipment repayment will not exceed the useful life of the machinery and equipment purchased with loan funds or 15 years, whichever is less; and working capital repayment will not exceed 7 years.

    What are the Interest Rates?
    The interest rate for the guaranteed loan will be negotiated between the lender and the applicant and may be either fixed or variable as long as it is a legal rate. Interest rates are subject to Agency review and approval. The variable interest rate may be adjusted at different intervals during the term of the loan, but the adjustments may not be more often than quarterly.

    Is Collateral Required?
    Yes. Collateral must have documented value sufficient to protect the interest of the lender and the Agency. The discounted collateral value will normally be at least equal to the loan amount. Lenders will discount collateral consistent with sound loan-to-value policy.

    Annual Renewal Fee?
    The annual renewal fee is paid once a year and is required to maintain the enforceability of the guarantee as to the lender.

    The rate of the annual renewal fee (a specified percentage) is established by Rural Development in an annual notice published in the Federal Register, multiplied by the outstanding principal loan balance as of December 31 of each year, multiplied by the percent of guarantee. The rate is the rate in effect at the time the loan is obligated, and will remain in effect for the life of the loan.

    Annual renewal fees are due on January 31. Payments not received by April 1 are considered delinquent and, at the Agency’s discretion, may result in cancellation of the guarantee to the lender. Holders’ rights will continue in effect as specified in the Loan Note Guarantee and Assignment Guarantee Agreement. Any delinquent annual renewal fees will bear interest at the note rate and will be deducted from any loss payment due the lender. For loans where the Loan Note Guarantee is issued between October 1 and December 31, the first annual renewal fee payment will be due January 31 of the second year following the date the Loan Note Guarantee was issued.

    Where Should Applications be Filed?
    Complete applications should be sent to the USDA Rural Development State Office for the project location. A list of offices and additional information can be obtained at http://www.rurdev.usda.gov/recd_map.html.

  • Socially Disadvantaged Farmers and Ranchers
    Makes and guarantees loans to approved socially disadvantaged applicants to buy and operate family-size farms and ranches.
  • The U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) makes and guarantees loans to approved socially disadvantaged applicants to buy and operate family-size farms and ranches.
    A socially disadvantaged (SDA) farmer, rancher, or agricultural producer is one of a group whose members have been subjected to racial, ethnic, or gender prejudice because of his or her identity as a member of the group without regard to his or her individual qualities. SDA groups are women, African Americans, American Indians, Alaskan Natives, Hispanics, Asian Americans and Pacific Islanders.
  • Sugar Storage Facility Loan Program
    Loans to processors of domestically-produced sugarcane and sugar beets for the construction or upgrading of storage and handling facilities for raw sugars and refined sugars.
  • The 2002 Farm Bill authorized loans to processors of domestically-produced sugarcane and sugar beets for the construction or upgrading of storage and handling facilities for raw sugars and refined sugars. The Sugar Storage Facility Loan Program (SSFL) is administered by USDA's Farm Service Agency (FSA).
    Click hereto view the fact sheet on the Sugar Storage Facility Loan Program. The SSFL Fact Sheet contains information regarding:
    • Eligible Borrowers
    • Eligible Storage or Handling Equipment
    • Term of Loan
    • Security for Loan
    • Loan Amount and Down payment
    • Interest
    • Installment Payments
    • Other pertinent information on the SSFL Program

Tax Information

Normally, you do not report loans you receive as income, and you report income from a crop for the year you sell it. However, if you pledge part or all of your production to secure a CCC loan, you can choose to treat the loan as if it were a sale of the crop and report the loan proceeds as income for the year you receive them. You do not need approval from the IRS to adopt this method of reporting CCC loans, even though you may have reported those received in earlier years as taxable income for the year you sold the crop.

Once you report a CCC loan as income for the year received, you must report all CCC loans in that year and later years in the same way, unless you get approval from the IRS to change to a different method. Refer to Change in Accounting Method in Publication 225, Farmer's Tax Guide.

Note: You can request income tax withholding on CCC loan payments made to you. Use Form W-4V, Voluntary Withholding Request (PDF). Refer to How to Get Tax Help in Publication 225 for information about ordering the form.

How To Choose To Report A CCC Loan As Income

To make the choice to report a loan as income, include the loan as income on line 7a of Schedule F (PDF) for the year you receive it. Attach a statement to your return showing the details of the loan.

Repayment of CCC Loans using CCC Certificates

Farmers who pledge part or all of  their production to secure a CCC loan may not be properly reporting market gain when they use CCC certificates in connection with paying off their loans.  See IR-2004-38, March 18, 2004, for more information regarding the tax considerations of this transaction.

 

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