Emergency Farm Loans

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The Farm Service Agency (FSA) of US Department of agriculture (USDA) operates the Farm Storage Facility Loan (FSFL) program, disaster loans designed to protect farmers and the contents of their land. This government loans program finances farmers at a low interest rate to upgrade or build farm storage and handling facilities. The program is implemented under authorization from USDA‘S Commodity Credit Corporation. The FSFL is one of several government loans to sustain and develop agricultural produce. There are also agriculture loans for land farm equipment purchasing, farm building, and livestock breeding. One of the most common types of government loans for beginning farmers is the Aggie Bonds program.

Certain conditions are laid down for these government loans be it the farm storage facility loan or other disaster relief loans.

The conditions under which a farm storage facility loan is sanctioned are:

● Prescribed farm records must be available with the applicant.
● Collateral is needed for emergency farm loan. In case the applicant is unable to provide collateral, the ability to repay can be taken as a substitute for collateral.
● Maximum limit of an emergency farm loan is $5,000,000.

In case of emergency, there are certain eligibility conditions to avail of disaster relief loans.

They are:

● Applicant must be a U.S citizen or a permanent resident of the US.
● Applicant must own or operate land in the disaster affected country.
● Production losses suffered or claimed must not be less than 30% of the crop production or livestock or building.
● Applicant should have a satisfactory credit history.
● Applicant should be able to furnish collateral for the loan and also have the ability to repay the loan.

Several states operate specialized loan and finance programs for agriculture loans for development of horticulture, irrigation, conservation, etc. Refer the NCOSASP directory of state programs for details on these loan programs.

Several states have state sponsored guarantee loan programs with small issues of activity bond and taxable bond to promote state’s agriculture. Several states grant and operate loan through a state agency using federal guarantees of 90% of principal and interest provided by Farm Service Agency of USDA. Many states provide agricultural loans through state agricultural agencies. These government loans are called direct loan program.

Some states have loan participation program to help low equity farmers to obtain agricultural loans. When the state agency purchases a loan from a local lender the state disperses funds to buy a part of the loan instead of guaranteeing full loan payment.