Farm Operating Payments Direct and Guaranteed
The United States Department of Agriculture Farm Service Agency (FSA) usually makes available government loans in the form of farm operating agricultural loans to farmers through institutions such as banks and other lending institutions. When the FSA directly lends to such farmers, they are called direct payments. The farm operating guaranteed loans are offered by banks and institutions, under which a guarantee is given by FSA up to 95% of the loss of principal and interest.
Farm operating loans are normally aimed towards assisting the farmers in buying items that are required for successful operation such as farm equipment, livestock, seeds, fuel, chemicals and also to meet farm related expenses such as repairs, insurance, maintenance and other supplementary operating expenses. Although farmers are eligible for both direct and guaranteed farm loans, there are certain qualifications and criteria that they need to fulfilled under each of the agricultural loans. The main criteria for a direct farm loan is that the person concerned must have adequate education and learning, training, practice and skill in operating and managing a farm land. In order to apply for direct and guaranteed government loans, the farmer must have a satisfactory credit history and must have failed to obtain government loans elsewhere.
Farmers who are unable to obtain credit under the guaranteed loans scheme may take assistance from FSA directly. That is why such loans aptly are named direct farm loans. Apart from providing such direct loans, FSA also extends supervision facilities to borrowers and undertakes credit counselling as well. For availing of these services, the borrowers’ repayment capacity should be well substantiated and they should also give assurance for securing the loan. The upper limit of a direct farm operating loan is $200,000.
The other criteria for this agricultural loan include the following:
● The borrower should be a US citizen or a permanent resident.
● Should not be charged under delinquency on any debt at any time in the past.
● Should not have caused loss to the government due to a previous pardoned Federal debt.
● Should be operating a family-sized farm.
Both direct and guaranteed farm operating loans must be repaid within 7 years. Government loans obtained for buying livestock and equipment normally take a longer repayment period not exceeding 7 years while operating expense loans are usually settled within a year. The interest rates under the direct farm operating loan depend on the government’s cost of funds. In some cases, the FSA can even offer a 4% rate for farmers who cannot afford to repay at the standard rate. Under the guaranteed farm operating loans, FSA charges an origination fee up to 1% of the guarantee amount. More details regarding the agricultural loan programs can be obtained from the US Department of Agriculture website.
Did You Know You May Be Eligible For Business Grants?
Every year, thousands of Americans apply for and receive business grants to start their own small businesses or to help grow their current businesses. These business grants are nicknamed 7(a) Grants because of the section in the Small Business Act, which requires that government agencies provide financial assistance to small businesses. Business grants are easy to get and provide valuable assistance to American citizens.