FSA Loans Explained

FSA loans are loans from the Farm Service Agency. They are given to family sized farms and ranches for farm ownership (FO) or operating loans (OL) to farmers who cannot otherwise get funding from a commercial lender. The loans can be used to purchase land, livestock, feed and seed, or other supplies. The funds can be used to develop a building or otherwise make improvements to the farm. The loans are backed by the United States Department of Agriculture, otherwise know as the USDA. 

Who may benefit from a FSA Loan?

Nearly any farmer or rancher can benefit from an FSA loan. As there are many programs available, there is one to fit the needs of most farming or ranching situations. Those who are just getting started in farming or ranching, minority groups, and those affected by disaster are the ones will be able to benefit the most from FSA loans. 

What types of loans are available?

FSA loans are available in a variety of types and sizes. The FSA offers the following loans:

  • Beginning Farmer and Rancher: For this loan, a farm may not have been in operation for more than 10 years. This applies to both individuals and businesses. In order to qualify, the farmer or rancher must have played a role in the farm for at least three years. The farm cannot exceed 30% of the median sized farm for the county where the farm operates. If the farm is a corporation, all members must be related and qualify as a beginning farmer or rancher.
  • Direct: These loans are provided directly to the farm for ownership (FO loans). As each local office sets the requirements for the loan, farmers and ranchers should seek advice from their local FSA branch to determine their qualifications and application process for the loan. 
  • Emergency: These loans are available to farmers who have fallen victim to natural disaster or drought. The loans are designed to help the farms recover lost profits from the damage, but in order to qualify, the farm must be owned and operated in an area that has been declared a disaster area by either the President of the United States or the Secretary of Agriculture. The farmer needs to demonstrate experience and establishment as an agriculture based business. If there is less than 30% crop loss, the farmer will not qualify for an emergency loan.
  • Guaranteed: These loans are given to the farmers and ranchers who cannot meet the requirements for a commercial loan.
  • Socially Disadvantaged: These loans are given to people who want to operate a farm and are considered a minority. Women, American Indians, African Americans, Alaskans, Asian Americans, Hispanics, and Pacific Islanders are all considered minorities for the purpose of this loan. 

FSA loans are designed to help keep farms and ranches running smoothly. Since agriculture is a very important part of the United States economy, it relies heavily on keeping as many farms as possible producing food and milk.