The Farm Service Agency will be offering specially targeted farm ownership and farm operating loans to underserved applicants along with loans for first-time farmers and ranchers.

"Each year, a portion of FSA’s loan funds are set aside to lend to targeted underserved and beginning farmers and ranchers," said US Department of Agriculture Kansas Farm Service Agency executive director acting SED Terry L. Hawk in a press release. "Farming and ranching is a capital intensive business and FSA is committed to helping producers start and maintain their agricultural operations."

Kansas FSA obligated more than $98 million in loans to underserved borrowers and beginning farmers and ranchers during the fiscal year 2017 which runs from Oct. 1, 2016, through Sept. 30, 2017.

According to the USDA, they define underserved applicants as a group whose members have been subjected to racial, ethnic or gender prejudice because of their identity as members of the group without regard to their individual qualities.

Underserved groups are classified as women, African-Americans, American Indians and Alaskan Natives, Hispanics, Asians and Pacific Islanders for farm loan program purposes.

The individual or entity must meet the eligibility requirements outlined for direct or guaranteed loans in order to qualify as a beginning farmer.

Individuals and all entity members must have operated a farm for less than 10 years as well.

The applicant must not own a farm greater than 30 percent of the average size farm in the county at the time of application for farm ownership purposes and applicants must materially or substantially participate in the operation.

All members must be related by blood or marriage and all entity members must be eligible beginning farmers if the applicant is an entity.

Applicants must also have participated for 3 of the last 10 years in the business operations of the farm prior to the date of the application. Applications can also be made by underserved or beginning farmers and ranchers who cannot obtain commercial credit from a bank for either FSA direct loans or guaranteed loans. Guaranteed loans are made by lending institutions who arrange for FSA to guarantee the loan while direct loans are made to applicants by FSA which can guarantee up to 95 percent of the loss of principal and interest on a loan.

For producers who do not meet the lender’s normal underwriting criteria, the FSA guarantee allows lenders to make agricultural credit available.

Farm ownership loans and farm operating loans are the two types of loans offered for the direct and guaranteed loan program.

Loans for farm ownership can be used to go towards purchasing or enlarging a farm or ranch, purchase easements or rights of way needed in the farm’s operation, build or improve buildings like dwelling or barn, promote soil and water conservation and development and pay closing costs.

Loan funds for farm operating can towards the purchasing of livestock, poultry, farm equipment, fertilizer and other materials necessary to operate a successful farm.

Family living expenses, refinancing debts under certain conditions, paying salaries for hired farm laborers, installing or improving water systems for home, livestock or irrigation use and other similar improvements can be used by operating loan funds.

Financing for direct farm ownership loans cannot exceed 40 years and repayment terms for direct operating loans depend on the collateral securing the loan and usually run from 1 to 7 years.

For direct loans, interest rates are set periodically according to the government’s cost of borrowing with interest rates for guaranteed loan terms are set by the lender.

Please contact your local FSA office for more information on FSA’s farm loan programs and underserved and beginning farmer guidelines.

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