Farm Service Agency

Guaranteed Farm Loans

FSA guaranteed loans are available to farmers who 

may not meet loan qualifications from a commercial 

lender. Guaranteed loans are made and serviced 

by commercial lenders, such as banks, Farm Credit 

System institutions, or credit unions. Under a 

guaranteed loan, a commercial lender makes and 

services the loan, and FSA guarantees it against loss up 

to a maximum of 90 percent in most cases or

95 percent in limited circumstances. FSA approves 

eligible loan guarantees and provides oversight of 

lenders’ activities. Contact a local FSA office for a list 

of participating lenders.

Farm Ownership Loans

Farm Ownership Loans may be used to purchase a 

farm, enlarge an existing farm, construct new farm 

buildings and/or improve structures, pay closing 

costs, and promote soil and water conservation and 

protection. The direct loans are available up to a 

maximum of $600,000. Microloans are also available. 

FSA will guarantee farm ownership loans through a 

commercial leader up to $2,037,000. The maximum 

repayment term is 40 years for both direct and 

guaranteed farm ownership loans.

Farm Operating Loans

Farm Operating Loans may be used for normal 

operating expenses, machinery and equipment, minor 

real estate repairs or improvements, and refinancing 

debt. The direct loans are available up to a maximum 

of $400,000. Microloans are also available. FSA will 

guarantee farm operating loans through a commercial 

leader up to $2,037,000. The repayment term may 

vary, but it cannot exceed seven years. Annual 

operating loans are generally repaid within 12 months 

or when the commodities produced are sold. Direct 

Overview

The U.S. Department of Agriculture’s Farm Service 

Agency (FSA) offers direct and guaranteed loans to 

farmers and ranchers to promote, build, and sustain 

family farms for a thriving agricultural economy.

Farm ownership, operating, and emergency loans 

are available under the Direct Loan Program. Farm 

ownership, operating, and conservation loans are 

available under the Guaranteed Loan Program. 

FSA offers two types of guarantees under the Land 

Contract Guarantee Program.

The goal of FSA’s farm loan programs is to help 

farmers and ranchers obtain commercial credit. Once 

you are able to obtain credit from a commercial lender, 

our mission of providing temporary, supervised credit 

is complete.

Direct Farm Loans

FSA’s Direct Loan Program is designed to help farmers 

start, purchase, or expand their farming operation.

From beginning farmers who have limited financial 

history to qualify for commercial credit to farmers 

who have suffered financial setbacks from natural 

disasters, FSA offers a variety of loans to provide 

additional resources farmers need to establish and 

maintain profitable farming operations. Farmers may 

apply for direct loans at their local FSA offices.

Farm Loans

Overview

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FARM LOANS OVERVIEW - OCTOBER 2022 2

operating loans require applicants to have sufficient 

education, training, or at least one year’s experience in 

managing or operating a farm or ranch within the last 

five years.

Down Payment Program

The Down Payment loan assists socially disadvantaged 

and beginning farmers in purchasing a farm.

Requirements:

• The applicant must make a cash-down payment of at 

least 5 percent of the purchase price;

• The maximum loan amount does not exceed 45 

percent of the least of the purchase price of the farm 

to be acquired, the appraised value of the farm to be 

acquired or $667,000 (Note: This results in a maximum 

loan amount of $300,150);

• The term of the loan is a maximum of 20 years. The 

interest rate is 4 percent below the direct farm 

ownership rate, but not lower than 1.5 percent;

• The remaining balance may be obtained from a 

commercial lender or private party. FSA can provide up 

to a 95 percent guarantee if financing is obtained from 

a commercial lender. Participating lenders do not have 

to pay a guarantee fee

• Financing from participating lenders must have an 

amortization period of at least 30 years and cannot 

have a balloon payment due within the first 20 years of 

the loan.

Youth 

Loans

Youth loans may 

be made to young 

persons who are 

sponsored by a 

project advisor, 

such as a 4-H club, 

FFA, tribal youth 

organization, or 

similar agriculture affiliated group. The project must 

provide an opportunity for the young person to acquire 

experience and education in agriculture-related skills. 

These loans are only available as direct loans with 

a maximum loan amount of $5,000. Youth loans are 

available to those between the ages of 10 and 20 years 

at the time of loan closing.

Emergency Loans

Emergency loans help farmers and ranchers who have 

suffered a loss caused by natural disasters that damaged 

their farming or ranching operation.

Emergency loan funds may be used to restore or replace 

essential property, pay all or part of production costs 

associated with the disaster year, pay essential family 

living expenses, reorganize the farming operation, 

and refinance certain debts. The county or counties 

where the farm is located must be declared a disaster 

area by the President or designated by the Secretary 

of Agriculture. For production loss loans, applicants 

must demonstrate a 30 percent loss in a single farming 

enterprise. Applicants may receive loans up to 100 

percent of production or physical losses.
FARM LOANS OVERVIEW - OCTOBER 2022 3

These loans are only available as direct loans from FSA 

with a maximum loan amount of $500,000.

Conservation Loans

Conservation Loans provide access to credit for farmers 

and ranchers who want to implement conservation 

measures on their land. These loans are available to 

both smaller and less financially established farmers 

and ranchers, and to larger and financially stronger 

farmers and ranchers. The family farm and test for credit 

requirements are not applicable to Conservation Loans.

Farmers and ranchers may use conservation loans to 

complete any conservation activity included in a USDA 

approved conservation plan or Forestry Management 

Plan. The maximum loan amount is $2,037,000 with a 

maximum repayment term of 30 years. Conservation 

Loans are available as guaranteed loans only.

Loans for Beginning and Socially

Disadvantaged Farmers

Each year, Congress targets a percentage of farm 

ownership and farm operating loan funds to beginning 

and socially disadvantaged farmers. Providing loan 

programs is important as these groups of farmers have 

historically experienced more difficulties obtaining 

financial assistance. FSA offers several loan programs 

to assist beginning and socially disadvantaged farmers 

(refer to the fact sheets titled Loans for Socially 

Disadvantaged Farmers and Ranchers and Loans for 

Beginning Farmers and Ranchers). FSA’s Down Payment 

Program is offered to assist socially disadvantaged and 

beginning farmers in purchasing a farm with a maximum 

loan amount of $300,150.

Land Contract Guarantees

FSA also offers financial guarantees for land sale 

contracts to a beginning or socially disadvantaged farmer. 

The seller may request either of the following:

• Prompt Payment Guarantee: A guarantee up to the 

amount of three amortized annual installments plus 

the cost of any related real estate taxes and insurance.

• Standard Guarantee: Aguarantee of 90 percent of the 

outstanding principal balance under the land contract.

The purchase price of the farm cannot exceed the lesser 

of $500,000 or the market value of the property.

The buyer must provide a minimum down payment of 5 

percent of the purchase price of the farm. The interest 

rate is fixed at a rate not to exceed the direct farm 

ownership loan interest rate in effect at the time the 

guarantee is issued, plus three percentage points. The 

guarantee period is 10 years for either plan regardless 

of the term of the land contract. The contract payments 

must be amortized for a minimum of 20 years. Balloon 

payments are prohibited during the 10-year term of the 

guarantee.

Who is Eligible

Eligibility requirements:

• Be a family farmer;

• Have a satisfactory credit history;

• Be a citizen of the United States, including Puerto

Rico, the U.S. Virgin Islands, Guam, American Samoa, 

Commonwealth of the Northern Mariana Islands, 

Republic of Palau, Federated States of Micronesia and 

the Republic of Marshall Islands; a U.S. non- citizen 

national or a qualified alien under federal immigration 

law;

• Be unable to obtain credit elsewhere at reasonable

rates and terms to meet actual needs;

• Have the legal capacity to incur the obligations of the 

loan;

• Not have outstanding unpaid judgments obtained by 

the U.S. in any court, excluding judgments filed in U.S. 

Tax Courts;

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FARM LOANS OVERVIEW - OCTOBER 2022 4

USDA is an equal opportunity provider, employer, and lender. fsa.usda.gov/

• Not be delinquent on a federal debt;

• Must not have provided FSA with false or misleading 

documents or statements in the past;

• Not have been convicted under federal or state 

laws of planting, cultivating, growing, producing, 

harvesting, or storing a controlled substance within 

the last 5 crop years;

• Not have received debt forgiveness from FSA 

(certain exceptions apply); and

• Be within the time restrictions as to the number of

years they can receive FSA assistance.

Applications may also be made by entities. Entities 

are corporations, cooperatives, joint operations, 

partnerships, trusts, and limited liability companies. 

Their members/stockholders must meet these same 

eligibility requirements. The entity must also be 

authorized to operate a farm or ranch in the state 

where the land is located.

For socially disadvantaged members, they must hold 

a majority interest in the entity applicant to receive 

targeted funding

Working with Farmers and 

Ranchers

FSA does more than just provide credit - it works 

with farmers and ranchers to identify strengths and 

opportunities for improvement in farm production 

and management. FSA helps farmers and ranchers 

find alternative options, so they can achieve success. 

Learning and improving business planning and financial 

insight through FSA’s credit management is the 

difference between success and failure for many farm 

families.

FSA works to keep farmers and ranchers farming. FSA 

may be able to support direct loan borrowers whose 

accounts are distressed or delinquent, including:

• Re-amortization, rescheduling, consolidation, and/or 

deferral of loans;

• Rescheduling at a lower interest rate;

• Acceptance of conservation contracts on 

environmentally sensitive land in exchange for 

reduction of debt; and

• Writing down the debt.

If none of these options results in a feasible farm 

operating plan, FSA will work with borrowers to 

determine if they are eligible for consideration to retain 

the homestead and up to 10 acres. Borrowers may be 

offered the opportunity to pay off their debt for an 

amount below the full debt if that amount represents 

the market value of the loan collateral.

Farms that come into FSA ownership are sold at market 

value, with preference given to socially disadvantaged 

and beginning farmers.

More Information

For more information visit, fsa.usda.gov/farmloans or 

farmers.gov. Find your local USDA Service Center at 

farmers.gov/service-locator.