USDA logo Building Sustainable Farms, Ranches and Communities

Guaranteed Farm Ownership and Operating Loans

Offering federally guaranteed loans for family farmers for farm ownership, farm operation, and the purchase of stock in cooperatives

Program Basics
The purpose of the Farm Service Agency's (FSA) guaranteed farm ownership (FO) and guaranteed operating loan (OL) programs is to help family farmers obtain commercial credit to establish or maintain a family farm or ranch. FSA guarantees against potential loss of the commercial loan at 90 percent of the loss of principal and interest. A 95 percent guarantee is provided in the case of loans to refinance an existing direct FO or OL or for loans made in conjunction with a beginning farmer down payment loan.

Farmers may also use FSA guaranteed loans to buy stock in a member-owned cooperative. The cooperative can be engaged in production, processing, packaging, and/or marketing of agricultural and forest products.

In some instances, a special interest rate assistance program may be used in which FSA provides assistance to the lender to lower the interest rate. The interest assistance is intended to assist farmers with low production or who suffered the effects of a natural disaster or adverse economic conditions get through a difficult period and become financially viable.

Project Examples

Application and Financial Information
Applicants apply for agricultural loans as they normally would with local commercial lenders that make agricultural loans in their community. The lender analyzes the farm customer's business plan and financial condition.

If the farm loan proposal looks realistic, is financially feasible, and there is sufficient collateral, but it cannot be approved because it does not meet the lending institution's loan underwriting standards, the lender may apply for an FSA loan guarantee.

In some cases, applicants may seek an FSA direct loan first, but a guaranteed loan must always be considered before a direct loan can be provided. Once an applicant provides all the financial and organizational information to the lender, the lender submits a guaranteed loan application to the local FSA office and the request will be approved or disapproved within 30 days after receipt of a complete application.

The number of guaranteed loans that FSA can provide each year varies depending on the demand for loan guarantees and the amount of guarantee authority appropriated by Congress.

Eligibility, Uses, and Restrictions
To qualify for an FSA Guarantee, a loan applicant must:

For guaranteed OL loans, authorized purposes include:

For guaranteed FO loans, authorized purposes include:


FSA is organized on a national, state, and county basis. However, guaranteed applications are accepted and processed only in county offices. Individuals should contact an agricultural lender but may also contact the nearest FSA county 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.

PDF Icon800KB ~ 118 pages

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