Farm loans discussed at extension breakfast
At a monthly OSU Ag Extension breakfast, Celina-based Farm Loan Officer Jason Gibbs explained Farm Service Agency loan programs. He said the goal of their programs is to help farmers move towards commercial credit.
The farm loans are geared towards those that don’t meet most commercial lending standards. The loans also help beginning farmers, traditionally underserved farmers such as women and minorities, and farmers who have commercial credit but have hit hard times, require a safety net. Gibbs described the FSA as a lender of last resort.
Auglaize FSA Director Anita Green said her office frequently consult Gibbs, when farmers are looking at legacy plans.
“Maybe passing a farm to a new generation, maybe a new farmer looking to purchase land,” she explained.
Gibbs said while they are mostly dealing with beginning farmer loans, they have also recently dealt with guaranteed loan programs.
Beginning Farm Loans are for individuals who has not operated a farm loan for more than 10 years, and for farm ownership purposes doesn’t own a farm greater than 30% of the average size farm in the county or greater than 64 acres.
Gibbs said fewer people know about their Youth Loan Program.
The loan program is for those 10 to 20 years old participating in 4-H,
FFA or similar organizations. They offer a maximum of $5,000 to youth to start your own herd, buy a tractor to use on a few acres or other needs.
The Guaranteed Loans for farm ownership and operation are offered to make agricultural credit available to farmers who do not meet normal underwriting criteria. If the loan was to fail and there was a loss, FSA may pay 90 to 95% of the loan.
“It’s a safety net program by the government,” Gibbs said.
He said they deal with a plethora of ag lenders in the area.
Maximum loan limits for guaranteed loans are $1.77 million.
For farmers with more operating costs, Farm Operating Loans could be an option.
They have up to a $400,000 operating loan limit. Term operating loans can range up to 7-year loan and 18 months fixed interest rate around 1.375 percent. The loan could cover livestock, machinery, crop inputs, capital improvements and conservation purposes. FSA considers if the operation is recognized in the community as a farm, and the amount of labor and credit needs during application.
Farm Ownership Loans up to $600,000 are available at a 2.75% interest rate for up to 40 years.
With farm ownership loans the applicant provides a 5% downpayment; 45% or up to $300,150, whichever is less, is provided by FSA. Another lender will finance 50 percent. FSA also has a 50/50 financing option.
He said the 1.5% interest rate draws producers to this option.
The FSA also offers Operating and Real Estate micro loans, although the borrowing limit is $50,000, which he admits “doesn’t get you much in this area”.
Gibbs said with COVID restrictions their office is by appointment only. For farmers looking to submit loan applications, Gibbs said they are currently jam packed.