Introduction to Farm Service Agency Loans

As a farmer or rancher, whether you are just getting started or have countless years of expertise, you may need to borrow money to establish, expand, preserve, or modify your business. Consider these factors if you are considering asking for a loan:

  • Are you looking to purchase or lease a farm or ranch?
  • Do you need to purchase items for your farm or ranch, such as a tractor, animals, irrigation pipes, or a greenhouse?
  • Do you own or rent farmland/ranch and wish to grow your business?
  • Has a natural calamity, such as drought, flooding, or a severe storm, harmed your business?

Suppose you responded "yes" to any of these concerns. In that case, you might be eligible for a loan from the Farm Service Agency (FSA), a division of the United States Department of Agriculture (USDA). If you are a farmer or rancher who has yet to obtain credit elsewhere to start, acquire, maintain, or grow your family farm, you may be able to obtain a loan or loan guarantee through the FSA's Farm Loan Programs. FSA loans, unlike commercial loans, are only temporary, and our mission is to assist you in moving to commercial credit. Our aim of providing temporary, regulated credit is complete if you can obtain credit from a commercial lender.

Guaranteed Loan Program

Commercial lenders, such as banks, the Farm Credit System, credit unions, and other non-traditional lenders make and service guaranteed loans. The FSA insures the lender's loan against loss up to 95% of the time. The FSA is in charge of authorizing all qualified loan guarantees and monitoring the lender's activity.

Program for Direct Loans

FSA makes and services direct loans with funds provided by the federal government. FSA is responsible for providing credit counseling and supervision to its direct borrowers by assisting applicants in determining the sufficiency of their real estate and facilities, machinery and equipment, financial and production management, and goals.

Program for Land Contract Guarantee

Land contract guarantees give specific financial guarantees to the buyer of a farm or ranch through a land contract sale to a new or underserved farmer or rancher.

Types of Loans Available

You can apply for many sorts of loans through the FSA, depending on your needs and present condition. This manual will assist you in answering the following questions:

What kind of loan do I require?

Do I meet the loan requirements?

What is the procedure for applying for a loan?

What paperwork or papers must I submit to apply?

The Guaranteed Loan Program provides financing for farm ownership, operation, and conservation. The Direct Loan Program offers farm ownership, operational, and emergency loans. Direct Microloans and EZ Guarantee financing programs provide farm ownership and operating loans. Under the Land Contract Guarantee Program, the FSA provides two types of guarantees. Furthermore, the FSA funds intermediate lenders under the Highly Fractionated Indian Land Loan Program.

You must first identify what form of loan you require before applying. If you require funds for multiple objectives, you may need to apply for more than one form of a loan at the same time. The following are examples of FSA loan types:

Farm Ownership Loans

Farm Ownership loans can help you buy or expand a farm or ranch, build a new or improve an existing farm or ranch building, cover closing expenses, and pay for soil and water conservation and preservation.

Operating Loans

Operating loans assist you in purchasing animals and equipment, as well as paying for modest real estate repairs and annual operating expenses.


Microloans are direct farm ownership and operational loans with a streamlined application procedure and minimal documentation to satisfy the needs of smaller, non-traditional, and niche-type companies.

Emergency Loans

Emergency loans can assist you if you have experienced a qualified loss due to natural disasters that have devastated your farm or ranch. Emergency loan money can be used to rehabilitate or replace important property, cover all or part of the production costs related to the catastrophe year, cover essential family living expenditures, reorganize the farming operation, and refinance specific debts.

EZ Guarantee Loans

EZ Guarantee loans are guaranteed farm ownership and operating loans with a streamlined application procedure and little documentation designed to satisfy the demands of small, non-traditional, and niche-type companies.

Conservation Loans

Conservation loans assist you in completing a conservation practice as part of an approved conservation strategy.

Land Contract Guarantees

Land contract guarantees provide certain financial guarantees to the seller of a farm or ranch through a land contract sale to a new or underserved farmer or rancher. The vendor has the option of requesting one of the following:

  • Prompt Payment Guarantee: A guarantee of up to three amortized annual installments plus applicable real estate taxes and insurance. The seller must select a third-party escrow agent to manage contract-related transactions.
  • Standard Guarantee: A 90 percent guarantee of the outstanding principal balance under the land contract. The seller is required to select a third-party servicing agent.

Terms and Loan Rates

When you receive a loan from the FSA or another lender, you must repay the loan amount (principal) plus interest. The interest rate levied on your FSA or commercial lender loan is referred to as the "rate." The length of time you make loan payments is referred to as the loan's "term." The amount of interest you will pay is determined by the interest rate and the length of the loan. The interest rate is expressed as a percentage rate. A lower interest rate indicates that the cost of borrowing money is lower; therefore, you pay less in interest. A greater interest rate indicates a higher cost, and you will pay more to borrow the money.

Some interest rates are fixed, which implies that the percentage rate remains constant during your loan repayment period. Other rates are variable, meaning that the percentage rate (%) can fluctuate regularly while repaying your loan. With a variable interest rate, the interest rate might rise or fall. The interest rates on FSA direct loans and land contract guarantees are fixed.