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Catalog of Federal Domestic Assistance

Program Descriptions

10.407:  Farm Ownership Loans

Objectives:  To assist eligible farmers, ranchers, and aquaculture operators, including farming cooperatives, corporations, partnerships, and joint operations, through the extension of credit and supervisory assistance to: Become owner-operators of not larger than family farms; make efficient use of the land, labor, and other resources; carry on sound and successful farming operations; and enable farm families to have a reasonable standard of living.

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

10.407 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:  An applicant must: (1) Not have caused a loss to the Agency after April 4, 1996, or received debt forgiveness on more than 3 occasions prior to April 4, 1996 to receive a guaranteed loan; (2) be unable to obtain suitable credit from other sources at reasonable rates and terms; (3) be a U.S. citizen or permanent resident and possess the legal capacity to incur the obligations of the loan; (4) have the necessary education and/or experience, training, and managerial ability to operate a family farm; (5) realistically project the ability to repay the loan; (6) be the owner-operator of a not larger than family farm after the loan is closed; and (7) if an individual, the applicant must not have a combined farm ownership, soil and water, and recreation loan indebtedness to FSA of more than $200,000, for direct loans; and $717,000 for a guaranteed loan(s), or a combination of direct and guaranteed indebtedness; or a total indebtedness against the property securing the loan(s) of more than the market value of the security, whichever is the lesser amount. If a cooperative, corporation, joint operation or partnership, the entity must be controlled by farmers or ranchers engaged primarily and directly in farming in the U.S., after the loan is made, and must consist of members, stockholders, partners, or joint operators (8) have a minimum of 3 years farming experience. Assistance is authorized for eligible applicants in the 50 States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Northern Mariana Islands, and, to the extent the Secretary determines it to be feasible and appropriate, the Trust Territories of the Pacific Islands. Applicants must also comply with the highly erodible land and wetland conservation provisions of Public Law 99-198 of the Food Security Act of 1985 (FSA). To be eligible to obtain a direct loan, a borrower must abide by the Agency's borrower training requirements. Applicants/borrowers requesting guaranteed loan assistance must meet all lender requirements.

Beneficiary Eligibility:  Applicants/borrowers are the direct beneficiaries and must meet the applicant eligibility requirements. Families, individuals, and entities who are farmers, ranchers or aquaculture operators are the beneficiaries.

Credentials/Documentation:  Applicants must prove that credit is not available elsewhere for the requested purpose; and that they possess sufficient training or farm experience. This program is excluded from coverage under OMB Circular No. A-87.

10.407 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review. This program is excluded from coverage under OMB Circular No. A-102.

Application Procedure:  Applicants file Form FMHA 410-1, Application for FSA Services, with supporting information, at the local county office of the Farm Service Agency for direct loans or Form FMHA 1980-25 with the prospective lender for loan guarantees. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:  Certification as to eligibility is made the Agency credit officials and an approval determination is made by an FSA official based on loan feasibility and soundness, and adequate security.

Deadlines:  None.

Range of Approval/Disapproval Time:  The loan approval official must approve or disapproves a completed application within 30 days on a guaranteed loan application and 60 days on a direct loan application.

Appeals:  Applicants for direct and guaranteed loans, may appeal adverse actions taken. The applicant is given an opportunity to appeal the decision to the National Appeals Staff. For guaranteed loans, both the lender and the applicant must request the appeal.

Renewals:  Applicants may reapply at any time. Applicants denied assistance through the appeal process must establish that substantial change has occurred, since the denial decision.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  Maximum direct $200,000, maximum guaranteed $717,000. Average direct $102,355, guaranteed $220,373.

10.407 RELATED PROGRAMS:

• 10.406 Farm Operating Loans;
• 15.124 Indian Loans: Economic Development.

10.407 PROGRAM ACCOMPLISHMENTS:

Loans are used to purchase, enlarge, and improve family farms. In fiscal year 1999, 1,666 direct, and 3,513 guaranteed loans were made.

10.407 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  FARM SERVICE AGENCY (DEPARTMENT OF AGRICULTURE )

Type of Assistance:  Direct Loans; Guaranteed/Insured Loans.

Obligations:  (Direct Loans) FY 99 $170,526,000; FY 00 est $150,000,000; and FY 01 est $150,000,000. (Guaranteed Loans) FY 99 $774,170,000; FY 00 est $1,000,000,000; and FY 01 est $1,000,000,000.

Budget Account Number:  12-4140-0-3-351; 12-1140-0-1-351.

Authorization:  Consolidated Farm and Rural Development Act, as amended, Subtitle A, Sections 302, 310D, Public Laws 100-233, 87-128, 91-620, 95-334, 97-98, 7 U.S.C. 1922; Section 303, Public Laws 87-708, 90-488, 95-113, 96-438, 7 U.S.C. 1923; Section 305, Public Law 92-419, 7 U.S.C. 1925; Section 307, Public Law 97-35, 7 U.S.C. 1927; Section 308, Public Laws, 87-798, 89-240, 92-133, 7 U.S.C. 1928; 7 U.S.C. 1934.

Regulations, Guidelines, and Literature:  7 CFR, Part 1943, Subpart A and Part 762. Farm Service Agency Fact Sheets; FSA Handbook 2 FLP; Program Aids 1610, "Farm Service Agency Producer's Guide to Loan Programs"; and 1620, "Lender's Guide to FSA Loan Programs."

10.407 INFO CONTACTS:

Regional or Local Office:  Contact the appropriate FSA State Office listed in Appendix IV of the Catalog.

Headquarters Office:  Department of Agriculture, Farm Service Agency, Director, Loan Making Division, Ag Box 0522, Washington, DC 20250. Phone: (202) 720-1632. (Home Page)

(See Appendix IV for more contact info.)

10.407 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  The selected criteria identify essential elements considered necessary to compare the needs of the various States, and to make the best use of available program funds. This program has no statutory formula or matching requirements.

Length and Time Phasing of Assistance:  Loans justified may be scheduled over a period up to 40 years. The interest rate for guaranteed loans is negotiated between the lender and borrower.

Uses and Use Restrictions:  Loan funds may be used to: (1) Enlarge, improve, and buy family farms; (2) provide necessary water and water facilities; (3) provide basic soil treatment and land conservation measures; (4) construct, repair, and improve essential buildings needed in the operation of a family farm; (5) construct or repair farm dwellings; (6) provide facilities to produce fish under controlled conditions.

10.407 POST ASSISTANCE REQUIREMENTS:

Reports:  Not applicable.

Audits:  Not applicable.

Records:  Not applicable.