USDA Farm Loan Program

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USDA - Farm Service Agency Farm Loan
Programs Americas Lender of First Opportunity!
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Americas Lender of First Opportunity!

• United States Department of Agriculture (USDA)
• Farm Service Agency (FSA)
• Farm Loan Programs

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Americas Lender of First Opportunity!

• FSA has been involved in agricultural lending
  for more than 70 years!
• FSA offers loan and credit counseling assistance
  to farmers who want to own and operate their
  own farm

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Americas Lender of First Opportunity!

• Individualized farm and business planning
  expertise

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Americas Lender of First Opportunity!

• Loan products tailored to your farming
  operation and needs
• Loans at low interest rates and extended terms

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Americas Lender of First Opportunity!

• Individualized decision- making based on your
  situation not formula- driven lending

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Americas Lender of First Opportunity!

• Partner with wide variety of resources
• Other lenders
• Extension Service
• Other experts

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Americas Lender of First Opportunity!

• Offer services not available by any other lender
• FSA uses state-of-the-art farm planning software

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Americas Lender of First Opportunity!

• Sustained service
• We stick with you even through tough times

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Americas Lender of First Opportunity!

• How do we do it?
• Direct and Guaranteed lending programs
• Operating loans (OL)
• Farm Ownership loans (FO)
• Emergency loans (EM)
• Direct loan product, only

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Americas Lender of First Opportunity!

• Farm Loan Programs
• Beginning Farmers
• Socially Disadvantaged applicants (SDA)
• General eligibility
• Getting started
• Resources
• Answer questions

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Americas Lender of First Opportunity!

• Farm Loan Programs
• Direct Loans
• Loan applications received and processed by
  FSA staff
• Guaranteed Loans
• Farmers work directly with a lender. The
  Lender then makes arrangements with FSA for a
  guarantee.

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Americas Lender of First Opportunity!

• Direct Operating Loans (OL)
• Annual operating expenses
• Seed, fuel, fertilizer, etc.
• Machinery and livestock purchase
• Direct Farm Ownership Loans (FO)
• Purchase farm real estate
• Improve real estate property
• Emergency Loans (EM)

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Americas Lender of First Opportunity!

• Guaranteed Loan Programs
• Operating Loans (OL)
• Terms Loans and
• Lines of Credit
• Farm Ownership (FO) Loans

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Americas Lender of First Opportunity!

• FSA Loan Limits
• Direct loans
• OL - 300,000
• FO - 300,000
• EM - 500,000
• Guaranteed loans
• 1,112,000 (FY 2010)

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Americas Lender of First Opportunity!

• FSA offers lending programs to a wide variety of
  farming operations
• Smaller, larger, traditional, non- traditional
• Congressional targeting

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Americas Lender of First Opportunity!

• Congressional Targeting
• Beginning Farmers
• Socially Disadvantaged Applicants

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Americas Lender of First Opportunity!

• Beginning Farmers
• Has operated a farm for 10 years or less
• Meets requirements of the program which he/she
  is applying
• For FO loans, owns acreage of less than 30 of
  the median size farm in the county
• FSA does not use age in making this
• determination

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Americas Lender of First Opportunity!

• Socially Disadvantaged Applicant
• Defined by law -
• one who is a member of a socially disadvantaged
  group whose members have been subjected to
  racial, ethnic, or gender prejudice because of
  their identity as a member of a group without
  regard to their individual qualities.

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Americas Lender of First Opportunity!

• Socially Disadvantaged Applicant
• For FLP purposes,
• American Indians or Alaskan Natives
• Asians
• Blacks or African Americans
• Native Hawaiians or other Pacific Islanders
• Hispanics
• women
• Other FSA programs may have different SDA
  definitions.

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Americas Lender of First Opportunity!

• Congressional Targeting
• All eligibility / loan feasibility
  requirements must be met
• Identification in these targeted groups often
  allows for easier access to limited program
  funds
• Funding targets are set by law

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Americas Lender of First Opportunity!

• Congressional Targeting
• Down Payment Loan Program
• 5 - minimum down payment
• 45 - FSA direct loan (maximum 225,000)
• Reduced interest rate
• Balance will come from other sources (can be
  guaranteed)

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Americas Lender of First Opportunity!

• General Eligibility
• Different criteria may apply depending on loan
  programs involved
• Operating loans
• Farm ownership loans
• Emergency loans

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Americas Lender of First Opportunity!

• General Eligibility
• Need lender referral
• US Citizen or legal resident alien
• Acceptable credit history
• Owner-operator or tenant operator

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Americas Lender of First Opportunity!

• General Eligibility
• Not be delinquent on a federal debt
• Not previously caused the Agency loss
• In all cases, must demonstrate adequate
  Management Ability

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Americas Lender of First Opportunity!

• Management Ability
• Each loan program has slightly different
  requirements
• Operating Loans
• 1-year complete production and marketing cycle
  (within the past 5 years)
• Farm Ownership Loans
• 3 years complete production and marketing cycle
  (within past 10 years)

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Americas Lender of First Opportunity!

• Financing start-up operations
• Know what you want, but, be realistic
• Write it down
• Dont expect everything at least, not all at
  once
• It may take years to accomplish your goals

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Americas Lender of First Opportunity!

• Business Plan
• How are you going to get from here to there?
• Short and long term goals?
• Plan conservatively
• Plan for contingencies
• More than theoretical
• More than internet research

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Americas Lender of First Opportunity!

• Business Plan
• Flexible
• Have records to support projections
• Have good financial records
• Get help from experts

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Americas Lender of First Opportunity!

• What is FSA looking for
• Creditworthiness
• History is a good indication of the future
• Collateral
• Does FSA have enough security to protect its
  investment?

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Americas Lender of First Opportunity!

• What is FSA looking for
• Capacity
• Can the farming operation repay the loan?
• Capital
• What is the customers contribution?

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Americas Lender of First Opportunity!

• What is FSA looking for
• Conditions
• Whats necessary to close the loan?
• Hazard insurance, etc.

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Americas Lender of First Opportunity!

• Finding FSA Resources
• Via the internet

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www.fsa.usda.gov
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Americas Lender of First Opportunity!

• Questions
• And
• Answers??

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Americas Lender of First Opportunity!

• Every farming operation is different and impacted
  differently by many factors.
• The information contained in this presentation is
  general in nature and intended to be used as a
  starting point for discussion. Regulations
  change frequently, impacting the validity and
  reliability of this information. This
  information should not be used as the sole basis
  of any decision. A thorough evaluation of your
  specific farming operation, situation and
  available FSA programs and requirements is
  necessary in every instance. Please contact your
  FSA staff to discuss your individual
  circumstances.