Fact Sheet

Programs Funding

August 2002

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Farm Loan

Frequently Asked Questions

Someone at the FSA office told

me the loan program I need to

apply for is out of money. Why

does FSA run out of money?

Each year Congress appropriates

money for FSA farm loans as part

of the USDA budget. The funds are

appropriated for the Government’s

fiscal year, which runs from

October 1 until September 30 of the

following year. The amount of

money appropriated by Congress

does not always meet the demand

for loan funds and the Agency may

run out of money for some

programs.

The local office tells me they are

out of loan money. But I know

people in other areas are getting

loans. How can this be?

Each year, when FSA receives loan

money in the budget, every State

receives an allocation of money

from the Agency. So, one State can

deplete its funds and be out of

money while other States are still

funding loans.

What does FSA do when States

start running out of money in

loan programs?

When funds in a loan program start

to run low and many States are out

of money, the Agency will usually

pool funds. Pooling means taking

all of the unused loan money from

the States and placing it in a

National Headquarters pool. By

pooling, FSA is able to move money

from areas where it is not being

used to areas where it is needed. If

there is enough left, the money will

be redistributed to States. If there

isn’t much left, the money will be

held at the national office, and

States can request funding on a

loan-by-loan basis. Pooling of

unused loan funds most commonly

happens in the spring.

What happens when an FSA loan

program is out of money?

Congress may pass a

supplemental appropriations bill to

make additional money available. If

Congress does not appropriate

additional money, loans cannot be

funded until the next fiscal year

when new appropriations become

available.

How does FSA allocate money to

the States to make loans?

The Agency allocates money based

upon the potential need for it.

Money is allocated to States based

upon the number of farmers in each

State, the value of farm assets and

net farm income. The biggest

factor in dividing the money among

the States is the number of farmers

in each State. The loan volumes of

previous years are sometimes

considered as well. FSA does not

allocate emergency loan money to

States because it is impossible to

predict the occurrence of natural

disasters or declarations of

quarantines. Instead, FSA makes

money available for loans when a

natural disaster or quarantine is

declared. Emergency loan money

is available on a first-come, firstserved basis.

Is any of the money targeted or

reserved for use by specific

groups of farmers?

Yes. FSA reserves loan money for

two specific categories:

Under-represented groups:

The law requires FSA to reserve or

target a portion of its direct and

guaranteed operating and farm

ownership loan funds for use

exclusively by socially

disadvantaged applicants (SDA).

SDAs are classified in one or more

of the following categories: women,

African Americans, Native

Americans, Alaskan Natives,

Hispanics, Asian Americans and

Pacific Islanders. In the farm

ownership loan program, the

percentage of loan funds targeted

for SDAs is based upon the State

percentage of the total rural

population made up of SDA groups,

and the statewide percentage of

total farmers who are female. In the

operating loan program, the target

is determined by the statewide

percentage of total farmers from the

SDA minority group, and the

statewide percentage of total

farmers who are female.
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Fact Sheet

Farm Loan Programs Funding

The United States Department of Agriculture

(USDA) prohibits discrimination in all its

programs and activities on the basis of race,

color, national origin, sex, religion, age, disability,

political beliefs, sexual orientation, or 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, DC 20250-9410 or call (202)

720-5964 (voice and TDD). USDA is an equal

opportunity provider and employer.

Beginning Farmers:

The law also requires FSA to

reserve or target loan funds for

exclusive use by beginning farmers,

as follows: Direct Operating, 35

percent; Guaranteed Operating, 40

percent; Direct Farm Ownership, 70

percent; Guaranteed Farm

Ownership, 25 percent. Funds

remain targeted for beginning

farmers in the guaranteed programs

until April 1 of each fiscal year. In

the direct programs, funds are

targeted for beginning farmers until

September 1 of each fiscal year.

When a loan program is out of

money, should I still apply for a

loan?

Yes!! Even when money has run

out for a loan program, FSA still

accepts, processes, and approves

loan applications. Approved loans

are held until money becomes

available. Loans are funded in a

dated order, based on the date the

application was received.

Submitting an application sets your

place in the waiting line for funds,

so it is to your advantage to apply

for a loan even when there is no

money available.

My application is approved, but

there is no money available.

How can I find out where I stand

and when there will be money for

my loan?

Usually when this happens, the

county offices are required to

submit information about approved

loans to the State office. The State

office staff sets up a waiting list for

the State using the loan application

dates. The county office can tell

you if your loan has been sent to the

State office and its status for

funding.

For More Information

Further information on FSA’s loan

programs is available from local

USDA Service Centers or on the

FSA website at: www.fsa.usda.gov.