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Options for First Time Farmer Loans

Agriculture has always been the backbone of America, and new farmers play a crucial role in sustaining this legacy. Establishing a privately owned farm can be a major investment. To help offset the costs associated with getting started, the Farm Service Agency (FSA) provides several direct and guaranteed loan programs available to first-time farmers. At the same time, new farmers and ranchers may wish to consider non-FSA loan options as they establish themselves in production agriculture.  

If you’re interested in breaking into the world of farming, you don’t have to go it alone. But what kind of support is the best choice for your situation? Get a closer look at what loan options are available, the eligibility criteria, their benefits, and how first-time farmers can kickstart their agricultural journey.  

FSA of the USDA Loans

The FSA of the US Department of Agriculture (USDA) provides financial support for up-and-coming farmers who are otherwise unable to secure funding. It does this by annually distributing a predetermined portion of funds from its direct and guaranteed farm ownership (FO) and operating loan (OL) budgets.  

Farm Ownership Loans: These loans provide access to land and capital. They enable first time farmers to purchase or expand their farms. Additionally, they can be used for essential farm improvements.  

Operating Loans: These loans assist beginners in covering normal operating expenses, living costs, and diversify their operations. They also open doors to new markets and marketing opportunities.  

These beginning farmer loans are backed by the federal government, allowing for lower interest rates. But perhaps even more than that, the USDA Farm Loan Program (FLP) exists to make requesting and receiving a first-time farmer loan as easy as possible. FLP staff are trained to be knowledgeable, up to date on industry and market trends, and predisposed to award loans. They will even often refer new farmers to other financial-aid options to create a customized solution to address unique lending situations. Finally, securing FSA loans to start a farm also makes the borrower eligible for other support and business planning services. 

FSA loans may be used to purchase land, livestock, equipment, feed, seed, and supplies, along with going towards construction and improvement costs.  

FSA First Time Farmer Loan Requirements

Despite their advantages, FSA loans may not be the best choice for everyone. The loans are fairly specific in terms of requirements and qualifications, making them a non-option for some first-time farmers. 

To qualify for an FSA loan for beginning farmers and ranchers, you must meet the following criteria:

  • You have not operated a farm for more than 10 years.
  • You substantially participate in the operation of a farm or ranch.
  • You do not own a farm or a ranch that is larger than 30% of the average size farm in the county.
  • You meet all of the loan eligibility requirements of the program you are applying for.
  • For applicants that are entities, all members must be related by blood or marriage, and all entity members must be eligible beginning farmers.

Note: Historically underserved groups and female farmers are exempt from acreage limitations.  

Additionally, FSA loans are limited in terms of the amount a first time farmer is allowed to borrow. As of the most current FSA guidelines, the maximum loan amounts are as follows:

  • Direct farm ownership: $600,000
  • Direct operating loan: $400,000
  • Microloan: $50,000 each for operating and farm ownership
  • Guaranteed farm ownership or operating loan: $1,776,000
  • EZ Guarantee: $100,000 ($50,000 if the lender is a micro lender)

Remember that these loan amounts are subject to change based on FSA guidelines and regulations. If you’re considering an FSA loan, it’s essential to consult with your local FSA office to get the most up-to-date information and determine the best fit for your specific needs. 

FSA Options per State

The USDA also fields FSA state offices designed to provide more specific services for individual regions. Check out the USDA interactive map to see information about FSA state offices across the country. 

Traditional Loans

When considering financing options for first-time farmers, it’s essential to explore alternatives beyond government-backed loans like those offered by the FSA. 

One alternative to an FSA loan is to take the more traditional route and secure a loan through a bank. Unfortunately, bank loans are bound by strict regulations, and may not be willing to risk investing in first time farmers. Many banks also like to pad their returns by including a large number of added costs and fees to their loans beyond what’s included in the rates.

Benefits of Alternative Lending

For those who are either ineligible or uninterested in securing an FSA loan, and who would prefer not to have to work through a bank, private-loan options provide a valid alternative. Private loans are issued by independent lenders and are not bound by the same restrictions imposed by the FSA or by most banking institutions. This makes them an attractive possibility for first time farmers who need more out of their loan.

For example, because alternative lending options are not funded by the federal government, they are free to operate without a maximum loan amount, or ‘cap.’ This may be particularly advantageous for farmers who encounter unexpected costs beyond the initial startup. By working with alternative lenders, first time farmers can get all of the financial support they need to find their feet, instead of having to settle for the limited amounts provided through the FSA. At the same time, those who are not eligible for an FSA first time farmer loan may discover that they easily qualify for a traditional agricultural loan. 

Finally, alternative agriculture business loans can be applied towards the complete range of agribusiness costs. Loans with cattle farms, dairy farms, poultry farms, and vegetable farms are also available to help even established farmers get more out of the work they are doing. 

QuickBridge for First Time Farmers

If you’re just getting started in family agriculture, you have several financial support options available. QuickBridge wants to make sure that you find the loan solution that works best for your situation. Our QuickBridge loan specialists are available to help you weigh your choices and identify the right opportunities to turn your dreams into reality. 

After all, the US needs its farmers. Talk to a QuickBridge loan specialist today, and get the resources you need to start feeding the nation.

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