Farm purchase and operating loans target disadvantaged
Farm Loan Manager Lori Brady for USDA's Farm Service Agency in Emery/Carbon counties reminded producers today that FSA offers specially-targeted farm loans known as Socially Disadvantaged Applicant (SDA) loans. These loan programs are designed to help farmers purchase and operate family farms.
"With these loan programs, FSA hopes to help reverse the declining number of farmers and ranchers across the United States and especially here in Emery/Carbon counties," said Brady. "These loans help to encourage and assist them in owning and operating their own farms and ranches, participate in agricultural programs, and become integral parts of the agricultural community."
According to Brady, FSA reserves a portion of its loan funds each year for SDA loans. USDA defines socially disadvantaged applicants as 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, socially disadvantaged groups are women, African Americans, American Indians and Alaskan Natives, Hispanics, and Asians and Pacific Islanders.
In fiscal year 2007, FSA obligated nearly $300 million in SDA loans across the nation. Direct loans are made to applicants by FSA and include both farm operating and farm ownership loans.
Guaranteed loans also may be made for farm ownership or operating purposes, and may be made by any lending institution subject to Federal or State supervision (banks, savings and loans, credit unions, and units of the Farm Credit System including the Bank for Cooperatives) and guaranteed by FSA. Typically, FSA guarantees 90 or 95 percent of a loan against any loss that might be incurred if the loan fails.
Repayment terms for direct operating loans depend on the collateral securing the loan and usually run from one to seven years. Brady says that repayment terms for direct ownership loans can be as long as 40 years. Guaranteed loan terms are set by the lender. Interest rates for direct loans are set periodically according to the Government's cost of borrowing.
Interest rates for guaranteed loans are established by the lender. Farm ownership loan funds may be used to purchase or enlarge a farm or ranch, purchase easements or rights of way needed in the farm's operation, build or improve buildings such as a dwelling or barn, promote soil and water conservation and development, and pay closing costs.
Farm operating loan funds may be used to purchase livestock, poultry, farm equipment, fertilizer, and other materials necessary to operate a successful farm. Operating loan funds can also be used for family living expenses, refinancing debts under certain conditions, paying salaries for hired farm laborers, installing or improving water systems for home, livestock, or irrigation use, and other similar improvements.
For additional information or applications for all FSA direct loan programs contact your local FSA Office located in the USDA Service Center at 1090 North Des Bee Dove Road, Castle Dale, UT 84513, 435-381-2300 x114.