The US Farm Services Agency issues loans to farming operations under certain conditions. There are multiple loan programs for loans of different sizes and purposes.
In all of its loan programs, the FSA is what is known as a "lender of last resort", meaning a borrower can only apply for a loan from the FSA if they are unable to get a loan elsewhere at reasonable rates and terms. Therefore, anyone considering an FSA loan should attempt to get the loan from a commercial bank, credit union or from the Farm Credit System first.
FSA Guaranteed Loans are the first option to consider for most operations. These loans are issued by commercial lenders but mediated and guaranteed by the FSA so that the borrower receives a fair rate and the lender is protected in the case of default. These loans can be used for purchasing land, investing in infrastructure and equipment or for any other operating costs.
Direct FSA loans are issued directly from the FSA to the borrower and are divided into the below programs by purpose and size:
Direct Farm Ownership Loans are issued for the purchase of farmland.
Direct Farm Operating Loans are intended to be spent on all manner of farm operating costs and capital investments.
Micro-loans are shorter-term and smaller loans with lesser requirements that can cover any of the above costs and begin a borrower's relationship with the FSA if they don't have the experience or paperwork required for a larger direct loan.
Emergency Farm Loans help eligible farmers and ranchers rebuild and recover from losses due to natural disasters.
In some cases, the FSA can also provide down payment assistance in conjunction with a direct or guaranteed loan through its Down Payment Loan Program.
Read more about FSA loans at the links above or in the FSA publication: "Your Guide to FSA Farm Loans".
Loans for New Operations
The FSA will finance new operations through the programs above, but they tend to require more information about the manager's experience. Read more in our article about starting a new agricultural operations.