Farm purchase and operating loans targeting socially disadvantaged groups
SAINT PAUL, Minn., March 29, 2007 - The USDA Farm Service Agency (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," said Perry Aasnes, state executive director.
With these loan programs, FSA hopes to help reverse the declining
number of farmers and ranchers across the United States and 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.
FSA reserves a portion of its loan guarantee funds each year for SDA
loans. Aasness says that 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 2006, FSA obligated more than $330 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 1 to 7 years. Aasness 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.
Applications for all FSA direct loan programs are made through FSA's
county offices. Check your local telephone directory for your county's
address and telephone number.
Additional program information is available at www.fsa.usda.gov |
