FSA Eases Guaranteed Loan Limits

USDA ups maximum loan limit to $1.094 million due to rising input costs.

Published on: Sep 26, 2008

Effective Oct. 1, USDA's Farm Service Agency is raising the maximum loan limit for FSA's guaranteed loan program to $1,094,000 – up from $949,000.

"The higher lending limit will allow lenders, using the guaranteed loan program, to better meet farmers increasing credit needs," explains Brymer Humphreys, executive director of FSA in New York. The increase limit reflects rising input costs, he adds. FSA's guarantee loan programs allow lenders to make ag credit available to farmers who don't meet the lender's normal underwriting criteria.

FSA guarantees loans to beginning farmers and limited resource producers, and ensures lenders (e.g., banks, Farm Credit System institutions, credit unions) with a guarantee of up to 95% of the loss of principal and interest on a loan. Local FSA offices can also provide direct loans to qualified farmers.

There are two types of guaranteed loans: Guaranteed Farm Ownership and Guaranteed Operating. Here's how they differ:

FO loans are made to purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, or refinance debt.

OL loans may be used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. They can also be used to pay for minor improvements to buildings, costs associated with land and water development, family living expenses, and to refinance debts under certain conditions.

For more details, contact your lender or the local USDA Service Center.