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Direct Farm Ownership and Operating Loans

Offering government loans to family farmers and ranchers for farm ownership and operating purposes

Program Basics
The purpose of the Farm Service Agency's (FSA) direct farm ownership (FO) and operating loan (OL) programs is to provide financing and assistance to family farmers and ranchers to establish farms and ranches, achieve financial success, and graduate to commercial credit or self-financing.

Project Examples

Application and Financial Information
Applicants must apply for direct loan assistance at an FSA county office or USDA Service Center. FSA officials will meet with the applicant to assess all aspects of the proposed or existing farming or ranching operation to determine if the applicant meets the eligibility requirements.

The loan recipient must meet certain eligibility requirements, request funds for authorized purposes, be able to repay and to provide enough collateral to secure the loan on at least a dollar-for-dollar basis.

Eligibility, Uses, and Restrictions
Eligible borrowers must be U.S. citizens, US non-citizen national or qualified aliens, unable to obtain credit through commercial sources, have sufficient education, training or experience, have an acceptable credit history, and be or plan to become owners or operators of family-sized farms. In addition, applicants requesting direct FO assistance must have participated in the business operations of a farm or ranch for at least 3 of the 10 years prior to the date of the application.

An applicant who applies for FO assistance must be a beginning farmer, one who has never received an FO, or has not had a direct FO loan outstanding for more than a total of 10 years prior to the date the new FO loan is closed. An applicant who applies for OL assistance must be a beginning farmer, one who has never received OL assistance or received OL assistance in no more than a total of 7 years before the date of the proposed loan.

FO loans may be used for acquiring or enlarging a farm or ranch, making capital improvements, paying closing costs, and paying for soil and water conservation improvements, including sustainable agriculture practices and systems.

OLs may be used to pay the costs of reorganizing a farm or ranch, buy livestock or equipment, buy supplies, finance conservation costs, pay closing costs, comply with requirements under the Occupational Safety and Health Act of 1970, pay tuition for borrower training classes, refinance indebtedness under certain conditions, and provide farm and family living expenses.

OL repayment schedules are based the loan purpose and the projected ability to repay the loan. Payments can be in equal or unequal installments, and the first payment is due when income is received. Standard FO loans may be made up to 40 years. Interest rates are calculated monthly, and is the lowest rate in effect at the time of loan approval or loan closing. A limited resource OL interest rate is available to applicants who are unable to develop a feasible farm plan at regular interest rates. Loans may be made for up to $300,000.

A portion of available loan funds are reserved for minority farmers and beginning farmers. "Beginning farmer" is defined in part as an applicant who has not operated a farm or ranch for more than 10 years. For beginning farm ownership loans, borrowers may not own acreage exceeding 30 percent of the median acreage for farms in the county.


FSA is organized on a national, state, and county basis. Applicants apply directly through local FSA county offices or USDA Service Centers. Individuals can locate the nearest FSA office by checking in the telephone white pages under U.S. Government, Department of Agriculture, Farm Service Agency.

Last Updated January 26, 2010

Please note: Building Sustainable Farms, Ranches and Communities is also available for download in PDF format.

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