Running a farm, regardless of commodity, can be very expensive. Starting a farm from scratch is even more expensive. To help, the USDA offers farm loans for beginning farmers and ranchers via the Farm Service Agency.
Jason Quintana, a Farm Loan Officer with the Farm Service Agency, says these loans are geared for those who cannot obtain commercial credit from a bank. He noted that while there is a lot of paperwork associated with these loans, USDA simply wants to make sure all applicants are successful…tape
“We’re looking at your total operation, whereas sometimes you would look at some of these other structures of loans where they’re looking more towards what you make versus what you have. And debt and looking at different ratios, we like to use those ratios, but more as indicators of where you’re at.”
Quintana added that once the application is submitted, USDA takes a deep dive into cash flow…tape
“Agriculture is one of the most volatile industries that I’ve seen, and it’s easier when you plan for the worst-case scenario. That’s what we try to do is to have these conservative numbers, go through budgets, and throughout this time we’re building a relationship going through it, so that there’s that trust on both sides. So, I feel like USDA, we pride ourselves on making sure that we put the producers first and try to help out in every way. I mean, even if we do get to that point of a denial, it’s not because of anything against them. That’s probably the best thing for the agency and for them.”
All direct farm ownership applicants must have participated in the business operations of a farm for at least three out of the last ten years prior to the date the application is submitted to FSA.
Guaranteed loans are made by lending institutions that arrange for the FSA to guarantee the loan. FSA can guarantee up to 95 percent of the loss of principal and interest on a loan.