USDA offering loans to farmers, ranchers

SPOKANE VALLEY – Underserved or beginning farmers and ranchers who cannot obtain commercial credit from a bank have a resource to turn to — the U.S. Department of Agriculture’s Farm Service Agency (FSA).

FSA is offering two types of direct and guaranteed loans: farm ownership loans and farm operating loans. Repayment terms for the latter are scheduled from 1 – 7 years while financing for the former cannot exceed 40 years, with interest rates for direct loans set by the government’s cost of borrowing and rates for guaranteed loans established by the lender.

According to an April 22 news release, farm ownership loans are available for a variety of uses from purchasing or enlarging a farm or ranch to building or improving buildings such as dwellings or barns to pay closing costs.

“Farming and ranching is a capital-intensive business, and FSA is committed to helping producers start and maintain their agriculture operations,” Washington state FSA Acting Executive Director Mike Mandere said.

USDA defines underserved applicants as a group whose members have been subjected to racial, ethnic or gender prejudice because of their identity as members of the group without regard to their individual qualities. For farm loan purposes, underserved groups include American Indian or Alaska Natives, Asians, Blacks or African Americans, Native Hawaiians or other Pacific Islanders, Hispanics and women.

To qualify as a beginning farmer, applicants must meet the eligibility requirements outlined for direct or guaranteed loans. Applicants must also have operated a farm or ranch for less than 10 years, materially or substantially participate in the operation and for farm ownership purposes must not have owned a farm greater than 30% of the average size farm in the county at the time of application.

According to information from the USDA, the average size of a farm in Lincoln County is 1,243 acres, making ownership of not more than 30% at 472.9 acres or less.

Direct farm ownership applicants must have participated in the business operations of a farm for at least three years out of the last 10 prior to application, with substitutions based on education, business management and/or military experience permitted for up to three full years of experience. Substitutions can also be based on participation with a qualified mentor and farm management experience as a hire laborer.

If the applicant is an entity, all members must be related by blood or marriage and all members must be eligible beginning famers. At least one member must have three years or more experience in the business operations of a farm prior to the date of the application submittal.

Direct loans are made to the applicants by FSA. Guaranteed loans are made by lending institutions who arrange for FSA to guarantee the loan.

“FSA loans are designed to make sure that everyone has access to credit, including underserved and beginning farmers and ranchers,” Mandere said. “Last year (2020), FSA in Washington obligated $35.7 million in loans to underserved borrowers and beginning farmers and ranchers.”

FSA can guarantee up to 95% of he loss of principal and interest on a loan. The guarantee allows lenders to make agricultural credit available to producers who do not meet the lender’s normal underwriting criteria.

More information on the program is available at USDA office, located at 8815 E. Mission Ave., Suite B in Spokane Valley or by going online to farmers.gov.