For a Farm Ownership Loan, the producer must also own the farm. Loan applicant completes the loan application, with FSA assistance if needed. FSA and the loan applicant meet to review and discuss the application. FSA determines if the applicant is eligible and reviews the application for repayment ability, security, and compliance with other regulations. FSA approves and obligates the loan.
Loan is closed, and the loan applicant receives the funds.
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.