The Maine Farm Service Agency of the US Department of Agriculture is offering specially targeted farm property and farm loans to underserved applicants and aspiring farmers and ranchers, according to a press release from the Bangor-based agency.
“Farming and ranching is a capital-intensive business and the FSA is committed to helping growers start and sustain their farm operations,” said Sherry Hamel, the agency’s state executive director.
During fiscal year 2021 (October 1, 2020 to September 30, 2021), the Maine FSA committed more than $9.8 million in loans to underserved borrowers and beginning farmers and ranchers.
USDA defines underserved applicants as a group whose members have faced racial, ethnic, or gender bias because of their identity as members of the group without regard to their individual qualities. For purposes of the Farm Loan Program, underserved groups are Women, African American, Alaskan and Native American, Hispanic and Asian, and Pacific Islanders.
To qualify as a prospective farmer, the individual or entity must meet the eligibility requirements listed for direct or guaranteed loans. In addition, individuals and all legal entities must have operated an agricultural holding for less than 10 years.
Applicants must contribute materially or substantially to the operation. For farm ownership purposes, the applicant must not own a farm at the time of application that accounts for more than 30% of the average farm size in the county. All applicants for direct farm ownership must have participated in the business operations of a farm for at least three years within the 10 years prior to the date of application. If the applicant is a corporation, all members must be related by blood or marriage and all members of the corporation must be eligible young farmers.
Underserved or budding farmers and ranchers unable to obtain business credit from a bank can apply for either FSA Direct Loans or Guaranteed Loans. Direct loans are granted to applicants by the FSA. Guaranteed loans are made by credit institutions that mandate the FSA to guarantee the loan.
Advertisement
The FSA can guarantee up to 95% of the principal and interest loss on a loan. The FSA Guarantee allows lenders to provide agricultural credit to growers who do not meet the lender’s normal underwriting criteria.
The Direct and Guaranteed Loan Program offers two types of loans: farm ownership loans and farm loans.
Farm property loan funds can be used to purchase or expand a farm or ranch, acquire easements or rights of way needed to operate the farm, construct or improve buildings such as a home or barn, shelter and to promote the development of soil and water and to pay the completion costs.
Farm loan funds can be used to purchase livestock, poultry, farm equipment, fertilizers, and other materials needed to run a farm successfully. Business loan funds can also be used for family living expenses, refinancing debt under certain conditions, paying wages for employed farm workers, installing or improving water systems for household, livestock, or irrigation, and other similar improvements.
The repayment periods for direct company loans depend on the collateral for the loan and are usually one to seven years. Funding for direct agricultural property loans may not exceed 40 years. Interest rates on direct loans are set periodically according to government borrowing costs. Guaranteed loan terms and interest rates are set by the lender.
Contact a local FSA office for more information on the agency’s farm loan programs and policies for underserved and aspiring farmers. To find a local FSA office, visit office.usda.gov.
Advertisement
similar posts
Comments are closed.