Farm Operating Loans (Direct and Guaranteed)
U.S. Department of Agriculture
What is Farm Operating Loans (Direct and Guaranteed)?
The Farm Service Agency (FSA) offers farm operating loans to family farmers and ranchers to promote, build and sustain family farms in support of a thriving agricultural economy.
- The goal of FSA's farm loan programs is to graduate its borrowers to commercial credit.
- Once a farmer is able to obtain credit from the commercial lending sector, the agency's mission of providing temporary, supervised credit is complete
FSA provides guaranteed and direct loans. Under a guaranteed loan, a commercial lender makes and services the loan, and FSA guarantees it against loss up to a maximum of 95 percent of loan value. For those not yet meeting the qualifications for a loan guarantee from a commercial lender, FSA also makes available direct loans, which are serviced by FSA. FSA has the responsibility of providing credit counseling and supervision to its direct borrowers by making a thorough assessment of the farming operation.
Eligible applicants may obtain direct loans for up to a maximum indebtedness of $300,000 and a direct operating Microloan for up to a maximum indebtedness of $50,000. Maximum indebtedness for a guaranteed loan is $1,399,000 (amount adjusted annually for inflation). The repayment term may vary, but typically it will not exceed seven years for intermediate-term purposes. Annual operating loans are generally repaid within 12 months or when the commodities produced are sold. In general, loan funds may be used for normal operating expenses, machinery and equipment, minor real estate repairs or improvements, and refinancing debt.
Administration
Farm Operating Loans (Direct and Guaranteed) is administered by U.S. Department of Agriculture.
Program Requirements
To be eligible for assistance, applicants must be family farmers, citizens, non-citizen nationals or legal resident aliens of the United States or U.S. territories, and be able to demonstrate one year of sufficient farm managerial experience. You must also meet all of the following:
- Have a satisfactory history of meeting credit obligations, and
- Have legal ability to sustain loan obligations, and
- Be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs, and
- Be the tenant-operator or owner-operator of a family farm after loan closing.
Applicants are automatically not eligible if either of the following apply:
- Are delinquent on a federal debt, or
- Have caused FSA a loss by receiving debt forgiveness (certain exceptions apply).
Application Details
What is the application process for Farm Operating Loans (Direct and Guaranteed)?
To apply for a direct operating loan, applicants must submit an application form (FSA-2001, "Request for Direct Loan Assistance") and all other required documentation to their local USDA Service Center or FSA County Office. Please follow guidance on “How to Complete an FSA Loan Application” found on the FSA Fact Sheet. Forms can be located on FSA's Farm Loan Programs Direct Loan Application Forms and Instructions page.
To apply for a guaranteed loan, visit your lender who will arrange for the guarantee.