"Direct" farm loans are made by FSA with Government funds. We also service these loans and provide our Direct loan customers with supervision and credit counseling so they have a better chance for success. Farm Ownership, Operating, Emergency and Youth loans are the main types of loans available under the Direct program. Direct loan funds are also set aside each year for loans to minority applicants and beginning farmers (see links below). To apply for a Direct loan, contact your local FSA office.

A direct loan applicant must:

Corporations, cooperatives, joint operations, and partnerships and their members/stakeholders must meet these same eligibility requirements, and the entity must also be authorized to operate a farm or ranch in the State where the land is located.

The following actions are usually taken as part of the application process:

Repayment terms and interest rates vary according to the type of loan made, the collateral securing the loan, and the applicant's ability to repay. Operating Loans are normally repaid within 7 years, and Farm Ownership Loan terms cannot exceed 40 years. The interest rates for Direct Loans are adjusted periodically based on the Federal Government's cost of borrowing.

A lower interest rate is available for producers with limited resources. Loans to limited resource producers are reviewed periodically to adjust the interest rate based on repayment ability.

Loans must be adequately secured. Collateral for Operating Loans consists of a first lien on crops to be produced and on livestock and equipment purchased or refinanced with loan funds. A lien may be taken on certain other chattel and real estate property, and an assignment usually will be taken on income such as that from a dairy enterprise. Collateral for Farm Ownership Loans consists of real estate only or a combination of real estate and chattels. FSA requires security of 150 percent of the loan amount, if available. At a minimum, the security must equal the loan amount.

FSA provides temporary credit to its direct loan borrowers; therefore, all borrowers are required to refinance their loans with a private, commercial lender when they are financially able to do so.

To improve their production and financial management ability, FSA requires all borrowers to complete farm and financial training courses. Some borrowers may receive a waiver from the course if they have demonstrated adequate knowledge and ability in the subject areas covered by the course.

As part of its supervised credit role, FSA will require borrowers to provide updated financial information periodically and participate in an annual review of their operation by FSA. The Agency completes a comprehensive evaluation of the real estate and chattel property used in the operation, the farm business organization and key personnel, and any planned changes to the operation. FSA will then identify and prioritize training and supervisory needs, and help the borrower complete a plan of supervision to assist the producer in achieving financial viability.

Also, all borrowers must operate their farms in an environmentally sound manner, comply with highly erodible land and wetland policies, and if necessary, operate according to a USDA land management plan.

For Direct Loans, farmers apply at the local FSA county office servicing the area in which they expect to carry out their operations.

To process a Direct loan application, FSA requires the loan applicant to pay a credit report fee. In addition, if a loan is made, the producer pays the fees charged for lien searches and for filing and recording security instruments.

With a Direct Farm Ownership Loan, you can purchase farmland, construct or repair buildings and other fixtures, and promote soil and water conservation.

Operating Loans may be used to purchase items such as livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. Operating Loans can also be used to pay for minor improvements to buildings, costs associated with land and water development, family subsistence, and to refinance debts under certain conditions.

USDA's Farm Service Agency (FSA) provides emergency loans to help producers recover from production and physical losses due to drought, flooding, other natural disasters, or quarantine.

The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources. Each fiscal year, the Agency targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers and ranchers.

The U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) makes and guarantees loans to approved socially disadvantaged applicants to buy and operate family-size farms and ranches.

FSA makes loans to individual rural youths to establish and operate income-producing projects of modest size in connection with their participation in 4-H clubs, Future Farmers of America, and similar organizations.

Further information and applications for the loan programs described are available at local FSA county offices. These are usually listed in telephone directories in the section set aside for governmental/public organizations under the U.S. Department of Agriculture, Farm Service Agency. To locate your local FSA Office, click here.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at 202-720-2600 (voice and TDD).

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, D.C., 20250-9410, or call (202) 720-5964 (voice or TDD).