Loans offered to socially disadvantaged

Published 12:33 pm Thursday, April 7, 2016

The Farm Service Agency makes direct and guaranteed loans to socially disadvantaged applicants that enable them to buy and operate family-size farms and ranches. Funds are reserved each year specifically for these loans, but regular loan funds can also be used.

According to a press release, direct loans may be made to qualified applicants by FSA for both farm operating and farm ownership purposes. Guaranteed farm loans also may be made for ownership or operating purposes, and may be made by any lending institution subject to federal or state supervision (banks, savings and loans, and units of the Farm Credit System) and guaranteed by FSA. Some state governments also operate farm loan programs that are eligible for FSA guarantees. FSA typically guarantees 90 or 95 percent of a loan against any loss that might be incurred if the loan fails.

Persons who are primarily and directly engaged in farming and ranching on family-size operations may apply. A family-size farm is one that a family can operate and manage itself.

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Socially disadvantaged loan applicants do not receive automatic approval. In addition to being members of a socially disadvantaged group, individual applicants under this program must meet all requirements for FSA’s regular farm loan program assistance, including: a satisfactory history of meeting credit obligations; sufficient education; training, or at least one-year’s experience in managing or operating a farm or ranch within the last five years for a direct operating loan, or for a direct farm ownership loan, have participated in the business operation of a farm or ranch for three years; be a citizen of the United States (or a legal resident alien), including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and certain former Pacific Island trust territories; be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs; and possess legal capacity to incur loan obligations.

A socially disadvantaged person is one of a group whose members have been subjected to racial, ethnic, or gender prejudice because of his or her identity as members of the group without regard to his or her individual qualities. For purposes of this program, socially disadvantaged groups are women, African Americans, American Indians, Alaskan Natives, Hispanics, Asian Americans and Pacific Islanders.

Contact the FSA County Office Farm Loan Program staff for more details about this program and other financial options.