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Farm Service Agency

U.S. DEPARTMENT OF AGRICULTURE

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# Beginning Farmers and Ranchers Loans

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- Beginning Farmers and Ranchers Loans
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America's next generation of farmers and ranchers are supported through FSA's "Beginning Farmer" direct and guaranteed loan programs. Farm Ownership loans can provide access to land and capital. Operating loans can assist beginning farmers in becoming prosperous and competitive by helping to pay normal operating or family living expenses; open doors to new markets and marketing opportunities; assist with diversifying operations; and so much more. Through the Microloan program, beginning farmers and ranchers have an important source of financial assistance during the start-up years.

While FSA is fully committed to all farmers and ranchers, there is a special focus on the particular credit needs of farmers and ranchers who are in their first 10 years of operation. Each year, FSA targets a portion of its lending by setting aside a portion of all loan funds for financing beginning farmer and rancher operations. With the single exception of the Direct Farm Ownership Down Payment Loan, the Beginning Farmer classification is not related to a type of loan program; it references a specific, targeted funding source.

## Resources

                                - Fact Sheet: Loans for Beginning Farmers and Ranchers  (PDF 1.6 MB)
                                - Direct Loan Making Handbook 3-FLP  (PDF 2.5 MB)
                                - Farm Answers Library
                                -  Farm Business Planning
                                - Farmers.gov

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## Loan Types

                                - Direct Farm Ownership Loan
                                - Direct Farm Operating Loan
                                - Farm Ownership or Farm Operating Microloan

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## Beginning Farmer and Rancher Frequently Asked Questions

**Beginning Farmer Definition**

A beginning farmer is defined as one who:
                            - Has not operated a farm or ranch for more than 10 years
                            - Does not own a farm or ranch greater than 30 percent of the average size farm in the county as determined by the most current   Census for Agriculture   at the time the loan application is submitted
                            - Meets the loan eligibility requirements of the program to which he/she is applying -   Farm Operating Loan ,   Farm Ownership Loan , or   Microloan
                            - Substantially participates in the operation

**Farm Acreage Limitations**

Here is an example:

Let's say the average size farm for "ABC County" is 94 acres. 30 percent of the average, rounded to the nearest tenth, is 28.2 acres. So, to meet the beginning farmer requirement, a loan applicant may not own more than 28.2 acres when the loan application is submitted.

If the farm crosses county lines and is located in more than 1 county, "ABC County" and "XYZ County," FSA uses the average size farm data for the county where the loan applicant lives. If the loan applicant's house is not located on the farm, then the Agency looks to the data for the county in which the largest portion of the farm is located.

If you are a member of an historically underserved group or a woman farmer, the farm acreage limitation does not apply.

**Down Payment Loan**

Being a beginning farmer is one of the requirements to be eligible for the Direct Farm Ownership Down Payment Loan. Down Payment loan funds may be used only to partially finance the purchase of a family farm. Loan applicants must contribute a minimum down payment of 5 percent of the purchase price of the farm and the Agency will finance 45 percent to a maximum loan amount of $300,150. The balance of the purchase price not covered by the down payment loan and the loan applicant's down payment may be financed by a commercial lender (XLS, 275KB), private lender, a cooperative, or the seller.

**Additional Information**

We encourage you to contact your local office or USDA Service Center to learn more about our programs. You also should be able to find a listing in the telephone directory in the section set aside for governmental/public organizations under the U.S. Department of Agriculture, Farm Service Agency. Our local FSA office staffs are happy to help you.

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Farm Service Agency

U.S. DEPARTMENT OF AGRICULTURE

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