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Grants to Help Minority and Small Farmers
Grants to fund loans to help farmers and ranchers
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Dateline: 08/16/02

Secretary of Agriculture Ann Veneman has announced an additional $98.2 million in grants will be plowed into the USDA's direct operating loan program from its guaranteed operating loan program in order to help meet the needs of farmers and ranchers. The USDA funding transfer will particularly help minority and small farmers, who receive direct operating loans through USDA programs.

"We are committed to utilizing all resources available to help farm and ranch families, particularly minority and small producers, who need assistance," said Veneman, in announcing the grants. "This transfer of funds will make low-interest loans available for an estimated 2,000 additional farmers and ranchers across America."

Direct operating loans from the Farm Services Agency (FSA) assist approximately 14,000 minority, beginning and other small farmers and ranchers every year. By law, congressionally approved funds needed to meet the needs of family farmers and ranchers can be moved between FSA loan programs by the Secretary of Agriculture.

Under conditions of the grants, the low-interest direct operating loans can be used by farmers and ranchers to:

  • purchase livestock, equipment and feed;
  • engage in conservation measures; and
  • refinance indebtedness.

The FSA offers two main loan programs to assist farmers and ranchers:

Guaranteed Loans
Under the guaranteed loan program, FSA guarantees loans made by conventional agricultural lenders for up to 95 percent of the principal loan amount. The lender is responsible for servicing the borrower's account for the life of the loan. All loans must meet certain qualifying criteria to be eligible for guarantees, and FSA has the right and responsibility to monitor the lender's servicing activities. Farmers interested in guaranteed loans must apply to a conventional lender, which then arranges for the FSA guarantee.

Direct Loans
Applicants unable to qualify for a guaranteed loan may be eligible for a direct loan from FSA. Direct loans are made and serviced by FSA officials, who also provide borrowers with supervision and credit counseling. Funding for direct loans is limited, and applicants sometimes have to wait for funds to become available. To qualify for a direct farm ownership or operating loan, the applicant must be able to show sufficient repayment ability and pledge enough collateral to fully secure the loan.

FSA's direct loans include Farm Ownership Loans of up to $200,000, which can be used to purchase farmland, construct or repair buildings and other fixtures, and promote soil and water conservation.

For more information on the direct and guaranteed loans programs, farmers and ranchers should contact or visit their local FSA offices.

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