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Financing Options for Ag Producers, Beginning Farmers

Financing Options for Ag Producers, Beginning Farmers
Image: iStock/Thinkstock

The USDA Farm Service Agency offers various loan programs for farmers and ranchers. Paul Guenther, a Farm Loan Manager in the Nebraska division, provided detailed insight on financing options for beginning farmers and ranchers.

Listen to the interview with Paul Guenther.

“Specifically what Nebraska FSA does from a farm loan perspective is support those beginning farmers and ranchers, or farmers and ranchers that need assistance, to get them to the point where they can qualify for commercial credit,” said Guenther. “Beginning farmers and ranchers line up directly with the farm mission, and we love supporting them.”

FSA offers two categories of loans, the Direct Loan Program and the Guaranteed Loan Program, with different types of loans in each category.

The Direct Loan Program

The Direct Loan Program works exclusively with FSA loan officials, and the money comes directly from FSA. According to Guenther, this program has all the options needed to start or build up a farm or ranch.

  • Farm Ownership Loan
    – Acquiring real estate
    – Making capital improvements to real estate
    – Maximum loan amount: $300,000
  • Farm Operating Loan
    – Assist with financial costs of operating a farm or ranch
    – Purchasing first set of breeding livestock
    – Purchasing machinery and equipment
    – Annual input expenses
    – Maximum loan amount: $300,000
  • Microloan
    – Shortened application process
    – Smaller or unique request
    – Maximum loan amount: $50,000

Guaranteed Loan Program

The Guaranteed Loan Program combines the efforts and financing of FSA with farm credit institutions or banking institutions. The FSA guarantees part of the loan to assist borrowers in building their credit.

Guenther said there are three main eligibility requirements he emphasizes when discussing both the Direct Loan Programs and the Guaranteed Loan Programs.

The first eligibility requirement is the test of credit. Guenther says that because the loans are supported by the government, FSA doesn’t compete with mainstream banks or farm credit institutions to finance loans. Therefore, if borrowers can qualify for a loan from a different source, FSA will lead them to those institutions.

The second eligibility requirement is the borrower must be the operator, providing day-to-day labor and management within the farm or ranch.

The third eligibility requirement, specifically for farm ownership loans, is the borrower must have participated in a farm or ranch business operation three of the last ten years. According to Guenther, the borrower doesn’t have to have an ownership interest, but he or she should have been making management decisions. FSA can substitute a year of military service or secondary education if the borrower doesn’t have three years of management involvement.

Guenther also discussed Borrower Training, which is required for all direct loan applicants. He says the training is required unless the borrower has completed college courses or training courses similar to the training program.

“FSA works with a lot of partner institutions to provide financial resources… We work closely if you do have questions on filling out a financial statement, developing your cash flow plan, and what it needs to look like. We want to work one-on-one with you in those situations,” said Guenther.

For more information on FSA Beginning Farmer and Rancher loans, visit or

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