How To Get A FSA Farmland Loan To Finance Your Farm

Setting up a working farm can be very costly.

Unless your farming property has been passed down to you from previous generations, you may need to buy the land first.

According to the USDA, the average cost of farmland in the U.S. is $3,160 per acre.

But land for farming isn’t the only cost. There is expensive equipment necessary to plant and harvest crops, irrigate and fertilize the crops and transport them to buyers. This is on top of the costs for hiring farm hands to help during the busy times.

But don’t give up your dreams to own and run a farm.

There are loans and grants specifically slated for smaller farm operations, minorities and even people with limited farm experience. 

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How To Find Funding To Launch Your Farm

America’s next generation of farmers and ranchers are being helped out financially through the Farm Service Agency (FSA).

Farm ownership loans are approved for both land and money for operating costs. 

Each year, Congress approves money for FSA loans as part of the USDA budget. However, this amount of money does not always meet the demand for loans and the agency has been known to run out of money.

But the agency has set up a safety net. Every US state is given its own allocation each year. There are certain states that need more money to grant loans. When this happens, the FSA can pool funds by taking money from states with excess and funnel them to those in a deficit.

If the loan money runs dry, farmers and ranchers should still apply in order to be considered for the next round of funds.

What Are FSA Loans For?

The goal of the loans is to help beginning farmers become prosperous and competitive. 

The loans are designed to:

• Help pay regular daily operating expenses such as the cost of hiring workers
• Assist with family living costs for families relying on the farm to earn a living
• Open doors to new markets, which helps them sell their harvested crops
• Help with diversifying their operations, such as growing new crops

Through its micro-loan programs, beginning farmers and ranchers can receive financial help during their early start-up years.

Each fiscal year, the agency allocates money towards a portion of the costs for farm ownership (FO) as well as operating funds (OF).

Although the FSA was established to help all farmers and ranchers out, there is a focus on the specific capital needs of farmers and ranchers launching their first 10 years of operations. In order to promote diversification, these targeted loans are meant not only for beginning farmers, but also for minority farmers and women farmers.  

How Big Is The FSA Fund?

The FSA sets aside $1,427,966,596 of funds annually, according to the 2023 numbers.

Targeted capital towards beginning farmers, minority and women farmers is significantly higher than money set for established farmers.

All states are not budgeted for the same loan amounts! The biggest factor in dividing the money among states is the number of farmers located within its borders. Other factors include the value of farm assets and net farming income for the states.

There is also emergency loan money, available on a first-come, first-served basis. Since it is impossible to predict severe weather, the agency only considers states where a natural disaster has been declared.

What Can You Use The Loans For?

They can be used to:

• Make a down payment on a farm
• Build, repair or improve farm buildings, equipment buildings and places to live on the property
• Use for soil and water conservation efforts

How Much Can You Borrow?

There is no minimum loan amount when you apply for funding. However the maximum loan amount is $50,000.

Other terms allow farmers to repay the loan over a maximum of 25 years.

Conclusion

Launching a new farm can be daunting, but there are readily available resources for everything to building and family living expenses.

If you set up a meeting with a loan officer, be prepared with detailed information including:

• What type of farm or ranch you need funding for
• How you plan to market and sell your products
• Put all your income and tax info in an organized binder
• List all your family expenses and income
• Any current leases or rents
• A comprehensive account of all the costs you expect to incur to start up your farm or ranch

Federal and state agencies place a premium on new farms that will help feed the world’s explosive population growth both now and in the near future.