Local Farm Service Agency funds targeted

Wednesday, March 4, 2009

Each year, the Farm Service Agency earmarks a portion of its farm loan funding for socially disadvantaged applicants, people who have been subjected to racial, ethnic or gender inequality without regard to their individual qualities. Socially disadvantaged applicants may be women, African Americans, American Indians, Hispanics, Asian and Pacific Islanders or Alaskan Natives. While funding is earmarked for loans to socially disadvantaged applicants, loan approval is neither automatic nor guaranteed.

Socially disadvantaged applicants must meet the same eligibility criteria as other applicants. Applicants must be U.S citizens; have a satisfactory history of meeting credit obligations; have sufficient education, training or experience managing or operating a farm; possess the legal capacity to incur debt; and, be unable to obtain credit elsewhere.

The agency can make direct loans to applicants who are unable to get commercial credit or provide loan guarantees to commercial lenders.

Guaranteed loans may be made by any lending institution subject to Federal or state supervision (banks, savings and loans, and units of the Farm Credit System). FSA typically guarantees 90 or 95 percent of the loan against any loss that might be incurred if the loan fails.

Applicants can use operating loans to purchase livestock, equipment, feed, seed or pay other business related expenses. Operating loans are usually repaid in one to seven years. The March, 2009 direct operating loan interest rate is 2.0 percent.

Ownership loans provide capital to purchase or enlarge a farm, construct or improve buildings, promote soil and water conservation and pay closing costs. Direct ownership loan terms are up to 40 years while guaranteed loan terms are established by the lender. The March, 2009 direct farm ownership rate is 3.5 percent. Farm Ownership loans utilizing a combination of Direct and commercial financing are available at 1.5 or 3.75 percent interest rates.

Qualified applicants receive information and assistance to develop sound management practices, analyze problems and utilize available resources essential for successful farming operations to cope with the changing agricultural environment.

Operating loans to individual rural youths age 10 through 20 to establish and operate income producing projects are also available.

These projects must be of modest size and be initiated, developed, and carried out by rural youths participating in 4-H Clubs, FFA, or a similar organization. The project must produce sufficient income to repay the loan, and provide the youth with practical business and educational experience. The March, 2009 interest rate is 2.0 percent.

For more information, Bourbon County producers should contact the Farm Service Agency office at 207 S. Summit, Girard, Kansas 66743 or call (620) 724-6227, Extension 229.

Editor's Note: Doug Niemeir is the County Executive Director for USDA/ Farm Service Agency. He can be contacted by emailing him at Douglas.Niemeir @ks.usda.gov