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This presentation covers: What kind of FSA loans are available

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FARM SERVICE AGENCY LOANS FOR SMALL AND BEGINNING FARMERS AND RANCHERS This presentation covers: What kind of FSA loans are available Loan Program Changes in the Farm Bill that help Beginning, Minority,
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FARM SERVICE AGENCY LOANS FOR SMALL AND BEGINNING FARMERS AND RANCHERS This presentation covers: What kind of FSA loans are available Loan Program Changes in the Farm Bill that help Beginning, Minority, and Female Farmers FSA makes direct and guaranteed loans Direct loans are made and collected by FSA» FSA provides technical assistance (supervised credit) in addition to loan funds» You will be required to refinance with commercial credit when you are able Guaranteed Loans are made by a commercial lender (Bank, Farm Credit, State Agency) and FSA guarantees against a loss Loans available to purchase, improve and operate a family farm Loans are available to anyone who qualifies, but targeted to beginning, minority, and female farmers in particular Farm Ownership Loan Purposes Acquire or enlarge a farm or ranch Make capital improvements Pay closing costs Direct FO may not be used to refinance any farm debt, except- Refinance temporary bridge loans for farm purchase Operating Loan Purposes Purchase assets: Machinery and equipment, including processing equipment for value-added marketing Livestock, poultry and other farm animals Coop stock, market quotas Refinance farm operating debts Pay annual operating expenses Feed, seed, fertilizer, rent, feeder livestock, etc. Beginning Farmer/Rancher Definition Has not operated a farm or ranch for more than 10 years Beginning Farmer/Rancher Definition Provides substantial day-today labor and management of the farm Meets regular FSA loan requirements 2008 Farm Bill Changes Revised Down Payment Program Changed Loan Limits and Funding Setasides Established New Programs Downpayment Program Applicants must: be beginning farmer have at least 3 years experience operating a farm or participation in farm operation own less than 30% of the median farm size in the county Down Payment Program Changes Before Farm Bill 10% Down payment required Now 5% Down payment required 4% interest rate Regular Ownership rate less 4 %, floor of 1.5% Maximum term 15 years Maximum term 20 years Down Payment Program Changes Before Farm Bill Maximum loan amount $100,000 Value of farm purchased cannot exceed $250,000 Must be beginning farmer Now Maximum loan amount $225,000 No limit on value of farm purchased Must be Socially Disadvantaged OR beginning farmer Impact of Down Payment Program Changes Sample 250,000 purchase Before Farm Bill $25,000 down FSA loan 100K, 4% 15 years FSA payment $8,994/year Other 7% 30 years $12,088/year Total installment $21,082 Now $12,500 down FSA loan 112.5K, 1.5% 20 years FSA payment $6,552/year Other 7% 30 years $12,088/year Total installment $18,640 Reduction: $2,442 Impact of Down Payment Program Changes Before Farm Bill FY loans Now FY loans $134.7 million By law, a portion of loan funds are targeted, or reserved for beginning farmers The Farm Bill Increased the target percentages This reserves more of the funds for beginning farmers Beginning Farmer Funding Target Changes Before Farm Bill Now Direct ownership loans- 70% 75% Down payment loans- 60% 66.6% Direct operating loans- 35% 50% Guaranteed ownership loans- 25% 40% Targeted Funds for Beginning Farmers Funding is limited, targets give beginning farmers priority for funding Funds are reserved for first six months of fiscal year Each state is allocated loan funds for beginning farmers Loans funds are available on first-come, first served basis Funding Outlook for 2010 Program 2009 Use* 2010 Expected Direct Operating $1.14 billion $700 million Direct Ownership $559 million $392 million Guaranteed Operating $1.38 billion $1.15 billion Guaranteed Ownership $1.21 billion $1.5 billion * As of 9/14 Loan Limit Changes Maximum amounts for FSA Direct Loans are written in the law The limits had not been changed since the late 1970 s/early 1980 s Direct loan limits were increased from $200,000 to $300,000 New Programs established by 2008 Farm Bill Conservation Loan Program to finance: Operator portion of EQUIP projects Other conservation projects Conversion to organic/sustainable production Land Contract Guarantee Program Guarantee contract land sales for SDA and beginning farmers New Programs established by 2008 Farm Bill Individual Development Accounts Program provides savings match for low income prospective farmers To be administered by non-profits use FSA grant funds Highly Fractioned Indian Land Help Indians retain land with fractioned title New Programs established by 2008 Farm Bill New Programs under Development 2010 Funding Expected for Conservation, Highly Fractioned Indian Land, Land Contract Guarantee Funding For Individual Development Account Program not likely in 2010 Where to get more information On the web Fact sheets on FSA farm loan and other programs Download and complete loan application and other forms Contact local FSA office
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