If you are looking to expand or improve your farming area, you are probably going to need to invest in a commercial farm loan. However, if you have experienced a natural disaster, determined by the president of Secretary of Agriculture to be a primary disaster or quarantine area, you may be eligible for an emergency recovery farm loan from the Farm Service Agency. Both of these loans will consider your credit score, assets, collateral, and repayment ability and also provide a steady interest rate, but that is where the similarities end.
In most details the FSA loans come with far more strict stipulations. Those involved must keep farm records to a certain level of completeness, meet with FSA staff to design a very specific farm recovery and repayment plan, and are obligated to meticulously follow that plan for the length of the loan. Also, the FSA may determine that the borrower need participate in a financial management and training program or obtain further insurance on their crop. These FSA loans are also only available to citizens or permanent residents with a demonstratable farming history, thirty percent losses to their property, crop, livestock, or products, and location in or adjacent to a declared disaster area.
However, these loans can sometimes be used for much more than a commercial loan. Repair, coverage of living expenses and production costs, reorganization, and refinancing of other debts are all included. The amount that can be borrowed scales up to 100% of production and physical losses from the disaster, capping at five hundred thousand dollars, with a repayment schedule between one to seven years, twenty in special circumstances.