The US population is growing, and so are the demands for farmers. Establishing a farm on your own can be an expensive venture. The Farm Service Agency offers several direct and guaranteed loans to help first-time farmers offset costs. As they begin to establish themselves as producers, new farmers or ranchers might also consider non-FSA loans.
You don’t need to do it all alone if you want to break into the farming world. What kind of assistance is best for you? Learn more about the different loan options available for first-time farmers and their benefits.
FSA for USDA Loans
The FSA of US Department of Agriculture provides financial assistance to young farmers who would otherwise be unable secure funding. This is done by distributing annually a predetermined amount of money from the direct and guaranteed farm-ownership (FO) and operation loan (OL).
The federal government backs these loans for beginning farmers, which allows them to have lower interest rates. The USDA Farm Loan Program exists to make it as simple as possible for first-time farmers to request and receive a loan. FLP staff is trained to be well-informed, current on market and industry trends, and inclined to grant loans. They may even refer new farmers towards other financial aid options in order to customize a solution for unique lending situations. Securing FSA loans for the start of a farm makes the borrower also eligible for additional support and business planning.
FSA loans can be used for the purchase of land, livestock and equipment, as well as construction and improvement expenses.
FSA First-Time Farmer Loan Requirements
FSA loans are not for everyone, despite their benefits. These loans have very specific requirements and qualifications. For some, they are not an option.
You must meet certain criteria to qualify for a FSA loan.
- You haven’t operated a farm in more than 10 Years.
- You play a significant role in the running of a ranch or farm.
- You don’t own a farm, ranch or other property that is bigger than 30% of average farm size in the county.
- If you apply for a loan, make sure that you meet the eligibility requirements.
- All applicants who are entities must have at least one member that is related to them by marriage or blood.
The amount of FSA loans that a first-time farmer can borrow is also limited. According to the latest FSA guidelines the maximum loan amount is as follows:
- Direct Farm Ownership: $600,000.
- Direct Operating Loan: $400,000
- Microloan for farm and operating ownership: $50,000
- Guaranteed farm loan or operating loan : $1,776,000
- EZ Guarantee: $100,000. ($50,000 if lender is a Micro lender)
FSA Options per State
USDA has also established FSA state offices to offer more specific services in each region. See the USDA Interactive Map for information on FSA state office locations across the nation.
Traditional Loans
The FSA was designed to assist borrowers to secure loan options that will help them break into agriculture, but government-backed financing may not be the best option.
Bank loans are a more traditional alternative to FSA loans. Bank loans are subject to strict regulations and they may not want to invest in new farmers. Banks also add a lot of fees and costs to their loans, in addition to the interest rates.
Alternative Lending: Benefits
Private-loan alternatives are available for those who do not qualify or who don’t want to deal with a bank. Independent lenders issue private loans that are not subject to the same restrictions as the FSA and most banks. They are therefore a good option for first-time farmers who want to get more from their loan.
Alternative lending options, for example, are funded by the federal governments and are therefore free to operate with no maximum loan amount or “cap.” This can be especially beneficial to farmers who have unexpected costs after the initial start-up. Working with alternative lenders allows first-time farmers to get the full financial support needed to start their business, without having to rely on the FSA’s limited amount. A traditional agricultural loan is available to those who do not qualify for the FSA’s first-time farmer loan.
Alternative agriculture loans are available to cover the full range of costs associated with agribusiness. There are loans with cow farms, milk farms, chicken farms, and vegetables farms to help established farmers make the most of their work.
QuickBridge for First Time Farmers
You have several options for financial assistance if you are just starting out in family farming. QuickBridge is committed to helping you find the best loan option for your specific situation. Our QuickBridge specialists can help you evaluate your options and find the best opportunities to make your dreams a reality.
The US is dependent on its farmers. Speak to a QuickBridge specialist today to get the resources needed to feed the nation.
A bank loan can be a more traditional alternative to an FSA. Bank loans are subject to strict regulations and they may not want to invest in new farmers. Banks also add a lot of fees and costs to their loans, beyond the rate.
