Farm
and Rural Development Act, as amended, Subtitle B, Sections 311-317,
Public Law 92-419, 7 U.S.C. 1942; Agriculture Act of 1961, Title
III, Public Law 87-128.
To
enable operators of not larger than family farms through the extension
of credit and supervisory assistance, to make efficient use of their
land, labor, and other resources, and to establish and maintain
financially viable farming and ranching operations.
TYPES
OF ASSISTANCE:
Direct Loans. Place Cursor Here for Definition
Guaranteed/Insured Loans. Place Cursor Here for Definition
USES
AND USE RESTRICTIONS:
Loan
funds may be used to: (1) Purchase livestock, poultry, fur bearing
and other farm animals, fish, and bees; (2) purchase farm equipment;
(3) provide operating expenses for farm enterprise; (4) meet family
subsistence needs and purchase essential home equipment; (5) refinance
secured and unsecured debts subject to certain restrictions; (6)
pay property taxes; (7) pay insurance premiums on real estate and
personal property; and (8) finance youth projects. Use restrictions
are shown under Applicant Eligibility.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: Except for youth loans, individual
applicants must: 1) Not have caused a loss to the Agency after April
4, 1996, or received debt forgiveness on more than 3 occasions prior
to April 4, 1996 to receive a guaranteed loan; 2) have the necessary
education and/or farm experience or training (1 year's complete
production and marketing cycle within the last 5 years); 3) do not
exceed the limitation on the number of years that assistance may
be received; 4) possess the legal capacity to incur the obligations
of the loan; 5) be unable to obtain sufficient credit elsewhere
at reasonable rates, and terms; 6) project the ability to repay
the loan; 7) be a citizen or permanent resident of the United States;
8) after the loan is closed, be an owner/tenant operator of a family
farm; and 9) comply with the highly erodible land and wetland conservation
provisions of Public Law 99-198 of the Food Security Act of 1985
(FSA); Certain corporations, cooperatives, partnerships and joint
operations ("entities") operating family-sized farms are also eligible
for farm operating loans. In brief, entity applicants must meet
some of the same eligibility requirements as individual applicants.
In addition, if members, stockholders or shareholders of the entity
are related by blood or marriage, at least one stockholder, shareholder
partner or joint operator must operate the family-sized farm. In
the case when members are not related by blood or marriage, the
majority interest holders in the entity must actually operate the
family-sized farm to be eligible. The entity must be authorized
to operate a farm in the State in which it is located. Limited resource
applicants must meet the above requirements. In addition, they must
have a low income and show a need for increased farm income. In
the case of limited resource entities, all the partners, joint operators,
members, or stockholders must be citizens and the entity must be
the owner-operator of the family farm with at least one partner,
joint operator, member or stockholder operating the farm. Assistance
is authorized for eligible applicants 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. To be eligible to
obtain a direct loan, a borrower must agree to abide by any "borrower
training" requirements. Applicants/borrowers requesting guaranteed
loan assistance must meet all lender requirements.
Beneficiary
Eligibility: Applicants/borrowers are the
direct beneficiaries and must meet the applicant eligibility requirements.
Families, individuals, and entities who are farmers, ranchers
or aquaculture operators are the beneficiaries.
Credentials/Documentation:
Applicants must prove that credit is not available elsewhere for
the requested purposes. This program is excluded from coverage
under OMB Circular No. A-87.
Pre-application
Coordination: None required. However, an informal
conference with the local county office staff is recommended. This
program is excluded from coverage under OMB Circular No. A-102 and
E.O. 12372.
Application
Procedure: Applicants file Form FSA 410-1,
Application for Direct Loan Assistance, with supporting information,
at the local county office of the Farm Service Agency for direct
loans or Form FSA 1980-25 with the prospective lender for loan
guarantees. This program is excluded from coverage under OMB Circular
No. A-110.
Award
Procedure: Certification as to eligibility
is made by the local county committee (unless that responsibility
has been delegated to the Agency credit officials) and an approval
determination is made by a FSA official as to loan feasibility
and soundness, and whether there is adequate collateral to secure
any loan.
Deadlines:
None.
Range
of Approval/Disapproval Time: The loan approval
official approves or disapproves a completed application within
60 days on a direct loan application and 30 days on a guaranteed
loan application.
Appeals:
Applicants for direct and guaranteed loans, may appeal adverse
action taken. The applicant is given an opportunity to appeal
the decision to the National Appeals Division. The applicant may,
in the final step of the appeals process, request a review by
the Director, National Appeals Division, Washington, DC. For guaranteed
loans, both the lender and the applicant must request the appeal.
Renewals:
Applicants may reapply at any time. Applicants denied assistance
through the appeal process must establish that substantial change
has occurred, since the denial decision.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: The selected criteria
identify essential elements considered necessary to compare the
needs of the various States, and to make the best use of available
program funds. This program has no statutory formula or matching
requirements.
Length
and Time Phasing of Assistance: Loans are
scheduled for repayment over periods up to 7 years, but when justified,
loans may be consolidated or rescheduled for up to 15 additional
years. The interest rate for guaranteed loans is negotiated between
the lender and borrower. If eligible, FSA may provide interest
rate assistance on guaranteed loans at the rate of 4 percent.
The interest rate for direct loans is determined by the Secretary
of Agriculture.
POST
ASSISTANCE REQUIREMENTS:
Reports:
Various States have USDA certified Agricultural Loan mediation programs,
which are designed to assist farm borrowers and their creditors
in resolving financial disputes through the process of mediation.
Where a State has such a farm credit mediation program, the lender
shall participate in accordance with the rules of that system. FSA
is not bound by any agreements developed in mediation or findings
of the mediation unless FSA agrees to them in writing.
Audits:
Not applicable.
Records:
Records on production, income, expenses during the period of the
loan.
Obligations:
(Direct Loans) FY 01 $664,207,000; FY 02 est $699,944,000; and
FY 03 est $513,305,000. (Unsubsidized Guaranteed Loans) FY 01
$998,533,000; FY 02 est $1,387,026,000; and FY 03 est $440,497,000.
Range
and Average of Financial Assistance:
Direct loans up to $200,000; guaranteed loans up to $731,000 (amount
adjusted annually for inflation); direct average loan size approximately
$47,365 and guaranteed average loan size approximately $157,339
for fiscal year 2001.
There were 14,023 direct and 11,444 guaranteed loans made in fiscal
year 2001. Farm operating loans provide credit to: (1) Establish
beginning farmers; (2) assist farmers suffering from the price/cost
squeeze, which will enable them to remain on the farm and refinance
secured and unsecured debts; and (3) expand farming operations.
REGULATIONS,
GUIDELINES, AND LITERATURE:
7 CFR, Part 1941, Subpart A and Part 762. Farm Service Agency Fact
Sheets; FSA Handbook 2 FLP; Program Aids 1610 "Farm Service Agency
Producer's Guide to Loan Programs"; 1620 "Lender's Guide to FSA
Loan Programs"; and 1630 "Rural Youth Loans".
INFORMATION
CONTACTS:
Regional
or Local Office: Contact 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.
