428 
‘‘(i) the farm is not larger than a family 
farm; 
‘‘(ii) the farm cannot be acquired in fee 
simple by the lessee-operator; 
‘‘(iii) adequate security is provided for the 
loan with respect to the farm for which the les-
see-operator applies under this chapter; and 
‘‘(iv) there is a reasonable probability of 
accomplishing the objectives and repayment of 
the loan; 
‘‘(3) in the case of a farmer that is a coopera-
tive, corporation, partnership, trust, limited liability 
company, joint operation, or such other legal entity 
as the Secretary determines to be appropriate, with 
respect to the entity and each farm in which the en-
tity has an ownership or operator interest— 
‘‘(A) if— 
‘‘(i) a majority interest is held by in-
dividuals who are related by blood or mar-
riage, as defined by the Secretary; 
‘‘(ii) at least 1 of the individuals is or 
will be the operator of the farm; and 
‘‘(iii) the farm is not larger than a 
family farm; 
‘‘(B) if— 
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‘‘(i) all of the individuals who are or 
propose to become owners or operators of 
a farm are related by blood or marriage; 
‘‘(ii) all of the individuals are or pro-
pose to become operators of the farm; and 
‘‘(iii) each of the interests of the indi-
viduals separately constitutes not larger 
than a family farm even if the ownership 
interests of the individuals collectively con-
stitute larger than a family farm; or 
‘‘(C) if— 
‘‘(i) the entire interest is not held by 
individuals who are related by blood or 
marriage, as defined by the Secretary; 
‘‘(ii) all of the individuals are or pro-
pose to become farm operators; and 
‘‘(iii) the farm is not larger than a 
family farm; 
‘‘(4) in the case of an entity that is, or will be-
come within a reasonable period of time, as deter-
mined by the Secretary, only the operator of a fam-
ily farm, if the 1 or more individuals who are the 
owners of the family farm own— 
‘‘(A) a percentage of the family farm that 
exceeds 50 percent; or 
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‘‘(B) such other percentage as the Sec-
retary determines to be appropriate; 
‘‘(5) in the case of an operator described in 
paragraph (3) that is owned, in whole or in part, by 
1 or more other entities, if each of the individuals 
that have a direct or indirect ownership interest in 
such other entities also have a direct ownership in-
terest in the entity; and 
‘‘(6) if the farmer (or in the case of a farmer 
that is an entity, the 1 or more individuals that hold 
a majority interest in the entity) is unable to obtain 
credit elsewhere. 
‘‘(c) DIRECT LOANS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary may make a direct loan under this 
chapter only to a farmer who has participated in 
business operations of a farm for not less than 3 
years (or has other acceptable experience for a pe-
riod of time determined by the Secretary) and— 
‘‘(A) is a qualified beginning farmer; 
‘‘(B) has not received a previous direct 
farm ownership loan made under this chapter; 
or 
‘‘(C) has not received a direct farm owner-
ship loan under this chapter more than 10 
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years before the date on which the new loan 
would be made. 
‘‘(2) YOUTH LOANS.—The operation of an en-
terprise by a youth under section 3201(d) shall not 
be considered the operation of a farm for purposes 
of paragraph (1). 
‘‘SEC. 3102. PURPOSES OF LOANS. 
‘‘(a) ALLOWED PURPOSES.— 
‘‘(1) DIRECT LOANS.—A farmer may use a di-
rect loan made under this chapter only— 
‘‘(A) to acquire or enlarge a farm; 
‘‘(B) to make capital improvements to a 
farm; 
‘‘(C) to pay loan closing costs related to 
acquiring, enlarging, or improving a farm; 
‘‘(D) to pay for activities to promote soil 
and water conservation and protection described 
in section 3103 on a farm; or 
‘‘(E) to refinance a temporary bridge loan 
made by a commercial or cooperative lender to 
a farmer for the acquisition of land for a farm, 
if— 
‘‘(i) the Secretary approved an appli-
cation for a direct farm ownership loan to 
the farmer for acquisition of the land; and 
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‘‘(ii) funds for direct farm ownership 
loans under section 3201(a) were not avail-
able at the time at which the application 
was approved. 
‘‘(2) GUARANTEED LOANS.—A farmer may use 
a loan guaranteed under this chapter only— 
‘‘(A) to acquire or enlarge a farm; 
‘‘(B) to make capital improvements to a 
farm; 
‘‘(C) to pay loan closing costs related to 
acquiring, enlarging, or improving a farm; 
‘‘(D) to pay for activities to promote soil 
and water conservation and protection described 
in section 3103 on a farm; or 
‘‘(E) to refinance indebtedness. 
‘‘(b) PREFERENCES.—In making or guaranteeing a 
loan under this chapter for purchase of a farm, the Sec-
retary shall give preference to a person who— 
‘‘(1) has a dependent family; 
‘‘(2) to the extent practicable, is able to make 
an initial down payment on the farm; or 
‘‘(3) is an owner of livestock or farm equipment 
that is necessary to successfully carry out farming 
operations. 
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