For Immediate Release
August 14, 2009
Gary Wall (720) 544-2892
Lakewood, Colorado - Trudy Kareus, State Executive Director of the Farm Service Agency (FSA) in Colorado, reminds producers that FSA makes and guarantees loans to provide financial assistance and business planning that help ensure the future well being of American agriculture. Each fiscal year, FSA targets a portion of its direct and guaranteed farm ownership and operating loan funds to beginning farmers and socially disadvantaged applicants (SDA).
A beginning farmer is an individual or entity who has not operated a farm for more than 10 years, substantially participates in the operation, and does not own a farm greater than 30 percent of the median size farm in the county. If the applicant is an entity, all members must be related by blood or marriage, and all members in a corporation must be eligible beginning farmers.
FSA defines a socially disadvantaged person as one of a group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as members of the group without regard to their individual qualities. For purposes of this program, these groups are women, African Americans, American Indians and Alaskan Natives, Hispanics, and Asians and Pacific Islanders.
"FSA wants you to succeed," said Kareus. "Not only do we offer low rates, but our Farm Loan Managers and Officers offer farm planning and counseling, supervised credit and assistance, and sustained financial planning services throughout the life of a direct loan."
The Beginning Farmer Down Payment Program is designed to assist beginning farmers and socially disadvantaged applicants in purchasing a farm. The maximum loan amount is $225,000 and cannot exceed 45 percent of the lesser of the purchase price of the farm or ranch to be acquired or its appraised value. The applicant must make a cash down payment of at least 5 percent of the purchase price. The term of the FSA loan is 20 years at a fixed interest rate of 4 percent below the direct Farm Ownership loan rate or 1.5 percent, whichever is greater. The remaining balance of the purchase price may be obtained from a commercial lender or private party. FSA can provide up to a 95 percent guarantee if financing is obtained from a commercial lender. This program provides a source of affordable financing for beginning farmers, as well as a method for retiring farmers to transfer their land to future generations.
Farm Ownership Loans may be used to purchase a farm, enlarge an existing farm, construct new farm buildings and/or improve structures, pay closing costs, and promote soil and water conservation and protection. Eligible applicants may obtain direct loans up to a maximum indebtedness of $300,000. Maximum indebtedness for guaranteed loans is $1,094,000 (amount adjusted annually for inflation). The maximum repayment term is 40 years for both direct and guaranteed farm ownership loans.
Farm Operating Loans may be used for normal operating expenses, machinery and equipment, real estate repairs, and refinancing debt. Eligible applicants may obtain direct loans for up to a maximum indebtedness of $300,000, and guaranteed loans for up to a maximum indebtedness of $1,094,000 (amount adjusted annually for inflation). The repayment term may vary, but typically it will not exceed 7 years for intermediate-term purposes. Annual operating loans are generally repaid within 12 months or when the commodities produced are sold.
FSA advertises inventory property within 15 days of acquisition. Eligible SDA and beginning farmers are given first priority to purchase these properties at the appraised market value. If one or more eligible SDA or beginning farmer offers to purchase the same property in the first 135 days, the buyer is chosen randomly.
"FSA Farm Loan Programs provide a variety of loan types for every need," says Kareus. "Whether it's a beginning, socially disadvantaged, or an existing farm business, Farm Loan Programs can help our customers grow and sustain their agricultural operations."
For more information about FSA's Farm Loan Program visit the Farm Service Agency website at www.fsa.usda.gov
or contact your local USDA Service Center