Beginning farmer loans available from Farm Service Agency
MOUNT PLEASANT — The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers who are unable to obtain financing from commercial credit sources. Each year the Agency targets direct and guaranteed farm ownership (FO) and operating (OL) funds to beginning farmers. The maximum loan amounts are $300,000 for a direct FO or OL. The maximum for a guaranteed FO or OL is $1,355,000.
A beginning farmer is an individual or entity who: (1) has not operated a farm for more than 10 years; (2) meets the loan eligibility requirements of the program; (3) substantially participates in the operation; (4) for FO purposes, does not own a farm greater than 30 percent of the median size farm in the county.
All applicants for direct FO loans must have participated in the business operation of a farm for at least three years.
FSA has a special Down Payment Farm Ownership Loan Program to assist beginning farmers in purchasing a farm. This program provides a means for retiring farmers to transfer their land to a future generation. The qualifications for this program include: (1) applicants must make a cash down payment of at least 5 percent of the purchase price; (2) FSA may provide a loan amount up to 45 percent of the purchase price, with a maximum loan of $225,000. The term of this loan is 20 years, with a fixed interest rate currently at 1.5 percent; (3) the remaining 50 percent balance may be obtained from a commercial lender or private party. FSA can provide up to a 95 percent guarantee with no guarantee fee if financing is obtained from a commercial lender; (4) financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years.
Beginning farmers may choose to participate in a joint financing plan. In this program, FSA lends up to 50 percent of the amount financed, and another lender provides the remaining 50 percent or more. Interest rates can be obtained from your local FSA office, and the term of the loan will not exceed 40 years.
Applications for direct loan assistance may be submitted to the local FSA office. Guaranteed loan applicants must apply to a commercial lender who participates in the Guaranteed Loan Program.
If you live in Henry, Des Moines, Louisa, or Washington county, contact Garry W. Movall, Farm Loan Manager of the Henry County FSA, for further information. The office is located at 709 S. Iris Street, Suite 102, Mount Pleasant, IA 52641. The telephone number is 319-385-2037. FSA is an Equal Opportunity Lender.