Aug 18, 2022
The U.S. Department of Agriculture (USDA) has released new lending rates for August 2022, and these rates are already in effect since August 1, 2022. The USDA’s Farm Service Agency (FSA) is responsible to provide agricultural producers with access to capital so that producers can start/expand their farming operations and purchase equipment and storage structures. With this capital, agricultural producers can also solve the problems of cash flow.
· Direct Farm Operating Loans: 4.000%
· Direct Farm Ownership Loans: 4.250%
· Direct, Joint Financing Farm Ownership Loans: 2.500%
· Down Payment Farm Ownership Loans: 1.500%
· Emergency Loans (Amount of Actual Loss): 3.750%
Farm Service Agency loans are available indifferent variants to meet different needs of agricultural producers and ranchers. Whether you are a multi-generational farmer, have spent a long time in this occupation, or are new to the industry, the Farm Service Agency provides financing to start, expand, or maintain a family agricultural operation through:
Farm ownership (FO) loans offer up to $300,000 and are intended to help you:
· Purchase or enlarge a farm or ranch
· Construct a new farm or ranch building
· Improve the existing farm or ranch building
· Pay closing costs
· Pay for soil and water conservation
· Invest in the protection of your farm or ranch building
On the other hand, Farm Operating (OL) loans offer up to $300,000, as well as micro loan options up to $35,000 and are mainly provided to farmers and ranchers to:
· Purchase livestock or farming materials
· Purchase equipment needed for farming or ranching
· Pay for small real estate repairs
· Pay annual operating expenses
For agricultural producers who have faced emergencies, such as flooding, drought, other natural disasters, or quarantine, the agency also provides emergency loans to help:
· Recover from production and physical losses
· Restore or replace essential property
· Pay entire or partial production costs associated with the disaster year
· Pay essential family living expenses
· Reorganize the farming operation
· Refinance certain debts
In addition to these loans, FSA also offers guaranteed loans up to $1,776,000 (that vary annually depending on inflation) through commercial lenders at interest rates defined by those lenders. FSA-guaranteed loans provide up to a 95 percent guarantee of the principal loan amount to conventional agricultural lenders. For FSA-guaranteed loans, the conventional agricultural lender is responsible to service the borrower’s account for the loan duration. FSA has the right and responsibility to monitor the lender’s loan servicing activities and requires all the loans to meet certain criteria to be eligible for guarantees.
Farmers and ranchers who wish to apply for FSA-guaranteed loans must connect with a conventional lender, which then arranges for the FSA guarantees.
Besides, for many farm service agency loan options, FSA also provides funding for producers that fall under the category of historically underserved producers, such as:
· American Indian
· Alaskan Native
· African American
· Native Hawaiian
· Pacific Islander
In addition, FSA also offers conservation loans that help farmers and ranchers complete a conservation practice in an approved conservation plan.
That’s not all!
The Farm Service Agency offers other types of loans, called commodity and storage facility loans. It provides:
· Low-interest financing to farmers and ranchers to build or improve on-farm storage facilities and purchase handling equipment
· Loans to provide interim financing to help farmers meet cashflow needs without selling their commodities when market prices are low
These types of loans are administered by the FSA but provided by the Commodity Credit Corporation (CCC).
Commodity and Storage Facility Loans’ Interest Rates Information:
· Commodity loans: 4.000% (less than 1 year disbursed)
· Sugar Storage Facility Loans (for 15 years): 3.250%
· Farm Storage Facility Loans: 3.000% (for 10 years) and 3.125%(for 3, 5, 7, and 12-year loan terms)
Yes. Certain farm service agency loans are also available for farmers who are affected by the Covid-19pandemic. As the pandemic continues to impact farmers, they can apply for a second DSA (Disaster Set Aside) loan for Covid-19 or a second DSA loan for a natural disaster with an initial DSA for Covid-19.
The COVID-DSA support is available for:
· Agricultural borrowers with installments due before December31, 2022
· Agricultural borrowers whose installment is not more than 90days past due when the DSA request was made
The due date of set-aside payment is moved to the final maturity date of the loan or extended up to 12months in case of an annual operating loan. Until the amount is repaid, any set-aside principal will continue to accrue interest.
The expanded DSA program is beneficial for affected agricultural producers as it helps improve their cash flow in the current production cycle.
The USDA has various programs to provide assistance to rural communities, farmers and ranchers, families, and small businesses affected by the year’s storms, drought, and other natural disasters. Many programs don’t have an official disaster designation but include several risk management and disaster recovery options.
At Royale Capital, we understand the unique challenges faced by new and growing agricultural producers. To ensure that you face no barriers in getting the financial help you need, we work with the USDA’s Farm Service Agency (FSA) to help you obtain loans that you cannot get from commercial lenders. We make the whole farm loan application process easy for you and are always ready to answer your questions.
So, if you are looking forward to obtaining farm service agency loans and have some queries in your mind, don’t hesitate to contact us. We are always happy to help the agricultural producers that our country needs the most.