Consolidated
Farm and Rural Development Act, as amended, Subtitle C, Sections
321-330, Public Law 92-419, 7 U.S.C. 1961- 1984; Public Law 96-438;
Public Law 97-35; Public Law 98-258; Public Law 99-198; Public Law
100-233; Public Law 100-387; Public Law 101-624.
To
assist established (owner or tenant) family farmers, ranchers and
aquaculture operators with loans to cover losses resulting from
major and/or natural disasters, which can be used for annual farm
operating expenses, and for other essential needs necessary to return
disaster victims' farming operations to a financially sound basis
in order that they will be able to return to private sources of
credit as soon as possible.
TYPES
OF ASSISTANCE:
Direct Loans. Place Cursor Here for Definition
USES
AND USE RESTRICTIONS:
Loan
funds may be used to repair, restore, or replace damaged or destroyed
farm property (real and chattel) and supplies which were lost or
damaged as a direct result of a natural disaster; under certain
conditions, refinance secured and unsecured debts made necessary
by the disasters; finance adjustments in the farming, ranching or
aquaculture operation(s) determined necessary to restore or maintain
applicants' operations on a sound financial basis equivalent to
their predisaster potential. The total of all actual loss loans
is based on actual dollar value of production and physical losses.
Loans are made at 3.75 percent interest, with a maximum limit of
80 percent of the actual production loss and 100 percent of the
actual physical loss, or $500,000 total indebtedness. Loans are
made in counties: (1) Named by the Federal Emergency Management
Agency as being eligible for Federal assistance under a major disaster
or emergency declaration by the President; (2) designated as natural
disaster areas by the Secretary of Agriculture; and (3) designated
by the FSA Administrator for severe physical losses, only, as a
result of a natural disaster.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Requires that an applicant: (a)
Not have caused a loss to the Agency after April 4, 1996, or received
debt forgiveness on no more than 1 occasion prior to April 4, 1996.
(b) be an established family farmer, rancher, or aquaculture operator
(either tenant-operator or owner-operator), who was conducting a
farming operation at the time of occurrence of the disaster either
as an individual proprietorship, a partnership, a cooperative, a
corporation, or a joint operation; (c) have suffered qualifying
crop loss and/or physical property damage caused by a designated
natural disaster; (d) be a citizen of the United States or legal
resident alien, or be operated by citizens and/or resident aliens
owning over a 50 percent interest of the farming entity; (e) be
unable to obtain suitable credit from any other source(s) to qualify
for subsidized loss loans; (f) have sufficient training or farming
experience in managing and operating a farm or ranch (1 year's complete
production and marketing cycle within the last 5 years immediately
preceding the application); (g) be able to realistically project
a feasible and sound plan of operation; (h) be a capable manager
of the farming, ranching, or aquaculture operations (in the case
of a cooperative, corporation, partnership or joint operation, if
members, stockholders, partners or joint operators own a majority
interest and are related by blood or marriage, at least one member,
stockholder, partner or joint operator must operate the family farm;
if not related, the majority interest holder(s) must operate the
family farm); (I) have legal capacity to contract for the loan;
(j) obtain eligibility certification; (k) provide adequate collateral
to secure the loan request; (l) have crop insurance if available
for affected crops comply with the highly erodible land and wetland
conservation provisions of Public Law 99-198 (16 U.S.C. 3801 et
seq.), (Title 12 and 13) the Food Security Act of 1985 and the Food,
Agriculture, Conservation, and Trade Act of 1990. Applicants who
cannot meet all of these requirements are not eligible. Assistance
is available in the 50 States, the Commonwealth of Puerto Rico,
the Virgin Islands of the United States, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, and, to the extent
the Secretary determines it to be feasible and appropriate, the
Trust Territories of the Pacific Islands, when those areas (by county)
are designated.
Beneficiary
Eligibility: Applicants/borrowers are the
direct beneficiaries when they meet all eligibility criteria.
Families, individuals and entities who are farmers, ranchers or
aquaculture operators are the beneficiaries.
Credentials/Documentation:
Applicants must establish that substantial physical property damage
and/or severe production losses, caused by the designated natural
disaster, has occurred. To qualify for loss loans, the applicant
must be unable to get credit elsewhere and demonstrate repayment
ability on the loan. This program is excluded from coverage under
OMB Circular No. A-87.
Pre-application
Coordination: None. This program is excluded
from coverage under OMB Circular No. A-102 and E.O. 12372.
Application
Procedure: Application Form FSA 410-1 provided
by the Farm Service Agency must be presented, with supporting
information, to the FSA county office serving the applicant's
county. FSA personnel assist applicants in completing their application
forms. This program is excluded from coverage under OMB Circular
No. A-110.
Award
Procedure: FSA Farm Loan Manager, State Executive
Directors, and the Administrator or his designee are authorized
to approve these loans, subject to certain administrative requirements,
after applicants are determined eligible.
Deadlines:
Deadline for filing applications for actual loss loans is 8 months
from the date of declaration/designation for both physical and
production losses. Applicants should consult the FSA county office
serving their area for application deadlines.
Range
of Approval/Disapproval Time: Applications
must be approved or disapproved within 60 calendar days after
the receipt of a completed application by the County Office.
Appeals:
Applicants for loans may appeal adverse actions taken. The applicant
is given an opportunity to appeal the decision to the National
Appeals Division.
Renewals:
Rescheduling, reamortization, consolidation and deferment: Up
to 15 years rescheduling for short and intermediate term loans
made for production-type losses. Long term loans may be reamortized.
However, the maximum statutory repayment period of 40 years for
real-estate purposes cannot be exceeded. Loans made for similar
purposes can be consolidated and rescheduled or reamortized. Generally,
real estate will be needed as security when a term of more than
7 years is authorized.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: None.
Length
and Time Phasing of Assistance: This varies
in accordance with individual case needs, type of disaster losses,
type of security available, and borrower's repayment ability.
Applicants should consult the FSA county office serving their
area for specific information.
POST
ASSISTANCE REQUIREMENTS:
Reports:
Borrowers are required to account for all security property.
Audits:
This varies in individual cases.
Records:
Applicants must furnish 5 year history of farm production, if
available, when production losses are claimed. Otherwise, FSA
records of acres grown and proven yields, county or State production
averages, or combinations of the above records when approved,
are used. Borrowers must keep adequate records as a condition
for receiving FSA financing. Specific financial information is
required to be maintained for 3 years for some borrowers as a
condition of receiving loan assistance.
FINANCIAL
INFORMATION:
Account
Identification: 12-4140-0-3-351.
Obligations:
(Direct Loans) FY 01 $150,852,000; FY 02 est $298,518,000; and
FY 03 est $40,571,000.
Range
and Average of Financial Assistance:
$500 to $500,000. Average: $58,000.
In fiscal year 2001, there were 2,451 loans obligated.
REGULATIONS,
GUIDELINES, AND LITERATURE:
(1) Farm Service Agency Fact Sheets, Program Aids 1610 'Farm Service
Agency Producer's Guide to Loan Programs", and 1632, "Natural Disaster
Assistance." Administrative regulations are published in the Federal
Register at 7 CFR Chapter XVIII, Part 1945, Subparts A, and D.
INFORMATION
CONTACTS:
Regional
or Local Office: Consult the appropriate FSA
State office listed in Appendix IV of the Catalog.
Headquarters
Office: Department of Agriculture, Farm Service
Agency, Director, Loan Making Division, Ag Box 0522, Washington,
DC 20250. Telephone: (202) 720-1632.
