Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Apr 29, 2021

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Summary

  • Farm loans are provided by the Farm Service Agency (FSA) to help with the costs of owning and operating a farm.
  • Farm loans can be procured directly from the government or through an approved lender with the backing of the FSA.
  • Farm loans can be used for anything from purchasing livestock to improving buildings.

Are you a farmer having trouble repairing your farm after a natural disaster? Are you a new and inexperienced farmer in the process of purchasing your first farm? If you answered yes to either of these questions, you may be considering a farm loan.

Farm loans are government-backed loans provided by the USDA Farm Service Agency (FSA). They’re kind of like SBA business loans, except FSA loans are provided specifically to help new and inexperienced farmers maintain farm operating and ownership costs.

There are several different types of farm loans available and interest rates vary depending on which you go with. Fortunately for you, we’re here to help you navigate the FSA loan process.

Keep reading below to learn all about farm loans, why you might need them, and how to get one. When you’re ready, enter your ZIP code into our free comparison tool above to find affordable farm loans from lenders in your area.

What are FSA farm loans?

As mentioned earlier, FSA farm loans are government-backed loans provided to help farmers and ranchers operate and maintain their farms.

There are four main types of farm loans offered by the FSA:

  • farm operating loans,
  • farm ownership loans,
  • microloans, and;
  • guaranteed farm loans.

Farm operating loans can be taken out specifically for the purchase of livestock, seed, and other farm equipment like tractors and irrigation systems.

Farm ownership loans can be taken out for the purpose of buying new land or expanding an existing farm. They can also be used to fund the construction of new buildings or the improvement of existing ones.

Finally, microloans are used to fund small and beginning farmers or non-traditional operations such as farmers’ markets. FSA loans are available both as direct loans from the government or as guaranteed loans made by approved lenders with the backing of the FSA.

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Why do I need a farm loan?

Perhaps you’re wondering why anyone would need farm loans in the first place. Shouldn’t a farm be able to take care of itself financially?

Well, the truth is there are lots of reasons people need to get a farm loan. Even the most profitable and well-run farms experience unexpected natural disasters that can lead to thousands if not millions of dollars in repairs.

That’s why, in addition to operation loans, farm ownership loans, and microloans, the FSA also provides emergency loans to help farmers and ranchers recover from losses due to natural disasters.

How do I qualify for an FSA loan?

As with any government loan program, there are certain eligibility requirements you must satisfy before you can apply for a farm loan.

Primarily, you must have an eligible farm operation. For instance, farms centered around breeding dogs, exotic birds, tropical fish, or racing horses are ineligible.

You must be a U.S. citizen and have a farm management background (through education or hands-on experience), and you may need to be the owner-operator of a farm to close on the loan.

Your credit history should not have a huge effect on your application if you are looking for a direct loan, but if you go with a guaranteed loan through a third-party lender, you may be denied if you have poor credit.

If you’re worried about your credit score, here are five ways to help pay off personal debt.

Now that you know how farm loans work, start searching for a farm loan today. Just enter your ZIP code into our free comparison tool below to find affordable government-backed farm loans from lenders near you.