The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Val Dolcini Friday announced additional funding will be made available to assist more than 1,900 approved applicants who are awaiting farm operating loans. The funds, which were reprogrammed by FSA with the approval of Congress, will leverage up to $185 million in additional lending for direct and guaranteed farm operation loans and will allow the agency to address up to 30 percent of its projected shortfall of funds until the next federal fiscal year resumes on Oct. 1.
“Some of our farming and ranching customers are experiencing challenges due to market conditions and have been on a wait list for up to 60 days, so this will help those applicants whose paperwork has been pending the longest period of time to obtain credit or restructure loans as needed,” said Dolcini. “While the backlog in loan applications will grow between now and the end of the fiscal year, it is important for borrowers to continue to apply since we will process loans on a first-come-first-served basis based on the application date, once funding is replenished in fiscal year 2017.”
FSA loan funds have been in higher demand than in past years. As a result, funding for FSA’s farm operating loans has been unable to meet the demand for the remainder of this fiscal year, which ends Sept. 30, 2016. In fiscal year 2016, FSA has guaranteed loans to more than 6,400 customers for farm ownership and operating purposes.
“This funding is important as it will allow us to address the backlog of applicants in Nebraska,” said USDA Nebraska FSA State Executive Director Dan Steinkruger. “Our offices will follow the national lead and work as quickly as possible to get this assistance to our producers. Those who are waiting should call their local FSA office to inquire about their application.”
USDA also reminded lenders and potential borrowers of the loan guarantee programs available from the Small Business Administration (SBA) that can be used for similar purposes as FSA guaranteed loans. Some lenders work with both FSA and SBA on loan guarantees and can switch between the programs. This ability to switch between programs means the SBA programs can provide a financing alternative for agricultural producers when their lender is unable to close an FSA guaranteed loan, such as when funds have been expended for the fiscal year.
“SBA fully supports our small business owners in the agriculture industry. For this fiscal year, as of July, more than $629 million in SBA loans have been provided to this community. We encourage agricultural small business owners and their lenders to look at all SBA has to offer,” said SBA Associate Administrator for Capital Access, Ann Marie Mehlum.
“Although SBA has different rates, terms, fees, limits and percentages than FSA loans, they can provide an alternative for banks and other lenders that are working to provide farmers and ranchers with guaranteed loans,” said Dolcini. The following chart provides more details:
Maximum Loan Amount
85% for loans of $150,000 or less
Guarantee Fee (charged on guaranteed portion only)
No fee on loans of $150,000 or less – (maturity greater than 1 year)
Operating Loans – 7 years
Operating Loans – 10 years
|Farm Service Agency||Small Business Administration||General Small Business Loan Program – 7(a)|
|75% for loans greater than $150,000|
|3% for loans of $150,001 to $700,000
3.5% for loans over $700,000
3.75% for loans over $1,000,000
Ongoing fee of 0.473%
|Real Estate Loans – 40 years||Real Estate Loans – 25 years|
Lenders may still submit guaranteed loan applications to FSA at any time for review and approval subject to the availability of funding. Approved requests will be funded on a first-come-first-served basis when additional funds become available.
More information about SBA loan programs can be found at www.sba.gov/loans. The Nebraska District Office of the SBA is located in Omaha and can be reached at (402) 221-4691. To learn more about USDA farm loans, visit www.fsa.usda.gov/farmloans or contact a local USDA office. To find the nearest USDA office, visit http://offices.usda.gov.