Loans



Looking for lending assistance for your agricultural operation?

The icons designate state and federal programs, as well as programs used for land, machinery, and refinancing purposes.

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Farm Storage Facility Loan Program

The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Farm Storage Facility Loan Program (FSFL) provides low-interest financing for producers to build or upgrade farm storage and handling facilities. The FSA is authorized to implement the program through USDA's Commodity Credit Corporation (CCC). For more information please contact your local FSA office or visit http://www.fsa.usda.gov/FSA/webapp?area=home&subject=prsu&topic=flp-fp

Click here to view the fact sheet on the Farm Storage Facility Loan Program. The FSFL Fact Sheet contains information regarding:

•Eligible facilities loan commodities

•Eligibility facilities and upgrades

•Eligible cost items

•Eligibility requirements

•Security requirements

•Maximum loan amount

•Facility Loan Terms

•Cost of obtaining a loan

•Persons required to sign the note

•Where to file the application

•Other pertinent information on the FSFL Program



Small Business First   Indexicons1

Provides low-interest loans for land and building acquisition and construction, machinery and equipment purchases, and working capital up to $200,000 or 40% of the total eligible project cost, whichever is less.



Eligible Applicants
Small businesses (100 employees or less), that are in:

  • Production agriculture
  • Agricultural processing

Eligible Uses

  • Land and building acquisition and construction
  • Machinery and equipment purchases and upgrades
  • Working capital

Loan Amounts

  • Loans up to $200,000 or 50% of total eligible project costs, whichever is less
  • Maximum loan amount for working capital is $100,000 or 50% of total eligible project costs,
    whichever is less

Terms

  • Up to 15-year term for land and building
  • Up to 10-year term for machinery and equipment
  • Up to 3-year term for working capital
  • Processors must create/save one job per $25,000 of loan

 

Interest Rate
A project where land is enrolled in a farmland preservation program or an Agricultural Security Area (ASA) or a project involving urban or rural supermarkets may receive a 1% reduction in the interest rate normally assessed for MELF loans, but the interest rate to be applied may not be less than 2%. Call 1-888-PAgrows for the current interest rates and any questions.



Machinery and Equipment Loan Fund   Indexicons1

Provides low-interest loan financing to acquire and install new or used machinery and equipment or to upgrade existing machinery and equipment up to $500,000 or 50% of the total eligible project cost, whichever is less.



Eligible Applicants

  • Production agriculture
  • Agricultural processing

Eligible Uses

  • Activities that use best management practices for agricultural waste, waste products and byproducts or fertilizer
  • Agribusiness
  • Energy related activities affecting production agriculture or agribusiness
  • Farmers markets
  • Fruit trees
  • Machinery and equipment acquisition and upgrading
  • Engineering and installation costs directly related to the operations or processes
  • The sale of farm commodities by urban and rural supermarkets located in underserved areas
  • The wholesale of farm commodities

Loan Amounts
Loans up to $500,000 or 50% of the total eligible project costs, whichever is less.

Terms

  • Up to 10-year term, depending upon the useful life of the machinery being financed
  • Project must be directly related to farming or food manufacturing
  • Processors must create/save one job per $25,000 of loan

Interest Rate
Call us at 1-888-PAgrows for current interest rates.  A project in which land is enrolled in a farmland preservation program or an Agricultural Security Area (ASA) or a project involving urban or rural supermarkets may receive a 1% reduction in the interest rate normally assessed for MELF loans, but the interest rate to be applied may not be less than 2%.

Guidelines (PDF)


Next Generation Farmer Loan Program   Indexicons1

The Next Generation Farmer Loan Program encourages lenders to finance beginning farmers by allocating a portion of the Commonwealth’s private activity bond volume cap to first-time farmer projects.  The loan is made at the lender’s credit standards and other terms and conditions.  However, because the program exempts the lender from owing Federal, State, or county income taxes on the interest it would earn from the loan, the lender can offer a lower interest rate than it usually would offer.



Eligible Applicants

    Beginning farmers:

  • Must be at least 18 years of age
  • No prior ownership interest in substantial amount of land exceeding 30% of median farm size in county where land is located
  • Resident of Pennsylvania
  • Net worth cannot exceed $529,880 as an individual or $1,059,760 million as a partnership.

Eligible Uses

  • Land and improvements and other depreciable assets such as machinery and equipment 
  • May be used between a borrower and lender for a loan to make a direct purchase of a farm and agricultural machinery and equipment, or between a buyer and seller for a contract purchase 
  • Purchase by contract from a related person is permissible under the program, under certain conditions

Loan Amounts
The total loan proceeds allocated to the purchase price of used equipment may not exceed $62,500. Otherwise, the maximum loan amount is $509,000.

Terms
Due to the nature of the loan, terms for the loan along with any additional conditions will be at the discretion of the individual lender.

Interest Rate
Interest rates are set by the individual lender and may be negotiated lower than current interest rates because of the nature of the loan.  Interest rates are negotiated between borrowers and lenders, or buyers and sellers in the case of contract sales.  Neither the Pennsylvania Department of Agriculture nor the Department of Community & Economic Development dictates interest rates in this program.

Guidelines (PDF)

Updated 2012 Median Farm Size (PDF)


PNC Working Capital Growth Fund   Indexicons1

Up to $100 million in low-interest rate financing for small businesses in Pennsylvania.  Working capital at attractive interest rates—that’s the one thing small to mid-sized businesses need to grow.  With that idea in mind, PNC Business Banking, in cooperation with the Commonwealth of PA, has established a special pool of funds – PNC's Pennsylvania Working Capital Growth Funds -designated to help businesses continue to grow right here in Pennsylvania.  For more information please visit PNC’s website.


Small Business Administration 504   Indexicons1

The CDC/504 loan program, part of the federal Small Business Administration, is a long-term financing tool for economic development within a community. The 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A Certified Development Company is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses.



Eligible Applicants
Any for-profit small business with a tangible net worth no more than $15 million and an average net income of $5 million or less after federal income taxes for the preceding two years to the application.

Eligible Uses
Land acquisition, site improvements (including grading, street improvements, utilities, parking lots and landscaping), acquisition of existing building, building renovation, leasehold improvements, new construction, machinery and equipment with a useful life of at least 10 years and certain soft costs, such as engineering fees, architectural fees, appraisal fees, and environmental fees. Changes made to the Small Business Jobs and Credit Act now allow small business owners to use 504 Loans to refinance up to 90% of the appraised value of available collateral.

Loan Amounts
The maximum loan amount is $5 million. Small manufacturers or certain types of energy projects may qualify for $5.5 million.

Terms
10 years for machinery and equipment; 20 years for real estate.

Interest Rate
Interest rates on 504 loans are set to an increment above the current market rate for five-year and 10-year U.S. treasury issues. Maturities of 10 and 20 years are available. Fees total approximately 3% of the debenture and may be financed with the loan. 

Job Criteria
One job to be created, or in some cases retained, for every $65,000 guaranteed by the SBA. If the project involves a small manufacturer, the requirement is one job for every $100,000. As an alternative to job creation or retention, a business may qualify if it meets a community development or public policy goal as long as the CDC maintains its portfolio job average requirements. Find the requirements at SBA 504 Loan Info.

SBA 504 Loan Info


 

USDA Farm Service Agency Guaranteed Loans Indexicons1

U.S. Department of Agriculture Farm Service Agency (FSA) guaranteed loans provide lenders (e.g., banks, Farm Credit System institutions, credit unions) with a guarantee of up to 95% of the loss of principal and interest on a loan. Farmers and ranchers apply to an agricultural lender that then arranges for the guarantee. The FSA guarantee permits lenders to make agricultural credit available to farmers who do not meet the lender's normal underwriting criteria.


FSA guaranteed loans are for farm ownership and operating purposes.  A percentage of guaranteed loan funds are targeted to beginning farmers and ranchers and minority applicants.



Eligible Applicants
To qualify for an FSA Guarantee, a loan applicant must:

  • Be a citizen of the United States (or legal resident alien), which includes Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and certain former Pacific trust territories.
  • Have an acceptable credit history as determined by the lender.
  • Have the legal capacity to incur the obligations of the loan.
  • Be unable to obtain a loan without a guarantee.
  • Not have caused FSA a loss by receiving debt forgiveness on more than three occasions.
  • Be the owner or tenant operator of a family farm after the loan is closed. For an operating loan, the producer must be the operator of a family farm after the loan is closed. For a farm ownership loan, the producer needs to also own the farm.
  • Not be delinquent on any federal debt. Entities (corporations, cooperatives, joint operations, partnerships, trusts, and limited liability companies) and their members/stockholders must meet these same eligibility requirements. The entity must also be authorized to operate a farm or ranch in the state where the land is located.

 

Minority and Women Farmers and Ranchers

Targeted FSA funds are available for Socially Disadvantaged Applicants (SDA): women, African Americans, Alaskan Natives, American Indians, Hispanics, Asians, Native Hawaiians, and Pacific Islanders. All SDA loan processes and requirements are identical to all non SDA processes and requirements.



*Applicant must provide his or her ethnicity, race, and gender on the loan application to be considered for targeted SDA loan funding

Eligible Uses

  • Farm Ownership Loans
    May be used to purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, or refinance debt.
  • Operating Loans
    May be used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. Operating loans may be used to pay for minor improvements to buildings, costs associated with land and water development, family living expenses, and to refinance debts under certain conditions.

Loan Amounts
FSA can guarantee operating loans or farm ownership loans up to $1,302,000 (amount adjusted annually based on inflation).

Terms
Repayment terms vary according to the type of loan made, the collateral securing the loan, and the producer's ability to repay. Operating loans are normally repaid within seven years and farm ownership loans cannot exceed 40 years.

Interest Rate
The guaranteed loan interest rate and payment terms are negotiated between the lender and the borrower. Interest rates on these loans may not exceed the rate charged the lender's average farm customer. In addition, under the Interest Assistance Program, FSA will subsidize 4% of the interest rate on loans to qualifying borrowers.

Fees
For most loans, FSA charges a guarantee fee of 1.5% of the guaranteed portion of the loan. This fee may be passed on to the borrower. The guarantee fee is waived for:

  • Interest assistance loans
  • Loans where more than 50% of the loan funds are used to pay off direct FSA loan debt
  • Loans in conjunction with a Downpayment Farm Ownership Loan program for beginning farmers or a qualifying state beginning farmer program. This fee waiver does not extend to all beginning farmers.

Secondary Market
The secondary market for USDA guaranteed loans is a key feature of the guaranteed lending program. The lender may resell the guaranteed portion of the loan to an interested party. The interested party then becomes the holder of the loan, but the original lender must retain the loan servicing responsibilities. Investors who are looking for safe investments with a reasonable return are attracted to these loans because of the government's full faith and credit guarantee against default. The existence of the secondary market makes guaranteed loan notes more liquid. By reselling the guaranteed portions, lenders reduce interest rate exposure, increase their lending capabilities, and generate fees.

Advantages of Using the Secondary Market
The existence of the secondary market is a strong inducement for lenders to become involved in guaranteed lending. Selling the guaranteed portion of the loan to other investors offers a number of advantages, including:

  • Reduced interest rate risk. Lenders can transfer risk of increases in interest rate on the guaranteed portion of a fixed rate loan.
  • Increased liquidity. Selling the loan on the secondary market frees the funds for additional lending or investing activity.
  • Increased lending or investing capabilities. Since the guaranteed portion of the loan is generally not applied against a bank's lending limit, it can be used to expand lending capabilities.
  • Increased return on investment. The sale of the guaranteed portion of the loan in the secondary market increases the lender's overall return on investment. Each time a bank sells a guaranteed portion, it generally retains a servicing fee.
  • Rates and Terms. Lenders may offer the producer more flexible repayment terms, as well as fixed and/or reduced interest rates to improve cash flow

 

USDA Farm Service Agency Direct Loans Indexicons1

Direct farm loans are made by the United States Department of Agriculture Farm Service Agency (FSA) with government funds.  The FSA services these loans and provides their direct loan customers with supervision and credit counseling so they have a better chance for success. Farm ownership, operating, emergency and youth loans are the main types of loans available under the direct program.  Direct loan funds are also set aside each year for loans to minority applicants and beginning farmers



Eligible Applicants
A direct loan applicant must:

  • Have sufficient education, training, or experience in managing and operating a farm or ranch that demonstrates the managerial ability needed to succeed in farming.
  • Be a citizen of the United States (or legal resident alien), which includes Puerto Rico, the Virgin Islands, Guam, American Samoa, and certain former Pacific trust Territories.
  • Have the legal capacity to incur the obligations of the loan.
  • Be unable to obtain credit elsewhere.
  • Have an acceptable credit history.
  • Be the operator or tenant operator of a family farm after the loan is closed. For a Farm Ownership Loan, the producer must also own the farm. For an Operating or Emergency Loan, the producer need only be the operator.
  • Not have had a previous loan that resulted in a loss to the FSA(with certain exceptions).
  • Not be delinquent on any Federal debt.
  • Corporations, cooperatives, joint operations, and partnerships and their members/stakeholders must meet these same eligibility requirements, and the entity must be authorized to operate a farm or ranch in the state where the land is located.

Eligible Uses

  • Farm Ownership Loans
    May be used to purchase farmland, construct or repair buildings and other fixtures and to develop farmland to promote soil and water conservation.
  • Operating Loans
    May be used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. Operating Loans can also be used to pay for minor improvements to buildings, costs associated with land and water development and family living expenses.

Loan Amounts
The maximum amount for farm ownership or farm operating loans is $300,000; rural youth $5,000; and emergency loans $500,000.


Loans for Beginning Farmers and Ranchers

FSA makes and guarantees loans to beginning farmers who are unable to obtain financing from commercial lenders. Each fiscal year, FSA targets a portion of its direct and guaranteed farm ownership and operating loan funds to beginning farmers.



A beginning farmer is an individual or entity who:

  • Has not operated a farm for more than 10 years
  • Meets the loan eligibility requirements of the program to which he/she is applying
  • Substantially participates in the operation
  • For farm ownership purposes, does not own a farm greater than 30% of the median size farm in the county

Note: All applicants for direct farm ownership loans must have participated in the business operation of a farm for at least three years. If an applicant is an entity, all members must be related by blood or marriage, and all members in a corporation must be eligible beginning farmers.

Terms
Repayment terms vary according to the type of loan made, the collateral securing the loan, and the producer's ability to repay. Operating loans are normally repaid within seven years and farm ownership loans cannot exceed 40 years.

Interest Rate
The interest rates for Direct Loans are adjusted periodically based on the Federal Government's cost of borrowing. Current interest rates can be found at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=fir
A lower interest rate is available for producers with limited resources. Loans to limited resource producers are reviewed periodically to adjust the interest rate based on repayment ability.

Fees
To process a direct loan application, FSA requires the loan applicant to pay a credit report fee. In addition, if a loan is made, the producer must pay the fees charged for lien searches and for filing and recording security instruments.

Types of Direct Loans

  • Beginning Farmer and Rancher Loans
    FSA targets a portion of direct loan funds to beginning farmers and ranchers who are unable to obtain financing from commercial credit sources.
  • Down payment Farm Ownership Loans for Beginning Farmers
    Helps beginning farmers and ranchers purchase a farm or ranch. This program also provides a way for retiring farmers to transfer their land to a future generation of farmers and ranchers.
  • Loans to Socially Disadvantaged Farmers/Ranchers
    FSA reserves direct loan funds each year to help socially disadvantaged applicants buy and operate family-size farms and ranches. Each of these loan types have additional requirements that can be found by visiting: http://www.fsa.usda.gov/pas/

Loans to Socially Disadvantaged

Guidelines (PDF)

Beginning Farmer/Rancher Down Payment Program Indexicons1

FSA has a special loan program to assist socially disadvantaged and beginning farmers in purchasing a farm. Retiring farmers may use this program to transfer their land to future generations.



To qualify:

  • The applicant must make a cash down payment of at least 5% of the purchase price of the farm.
  • The maximum loan amount does not exceed 45% of the least of (a) the purchase price of the farm or ranch to be acquired; (b) the appraised value of the farm or ranch to be acquired; or (c) $500,000 (Note: This results in a maximum loan amount of $225,000).
  • The term of the loan is 20 years. The interest rate is 4% below the rate of the farm ownership program rate, but not lower than 1.5%.
  • The remaining balance may be obtained from a commercial lender or private party. FSA can provide up to a 95% guarantee if financing is obtained from a commercial lender. Participating lenders do not have to pay a guarantee fee.
  • Financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan.

Microloan

The Microloan program was developed to serve the unique financial needs of beginning, niche and family farms by modifying its Operating Loan application, eligibility and security requirements. The program offers more access to credit and will serve as an alterative for smaller farm operations. The application process has been simplified and requirements for managerial experience and loan security have been modified to accomodate smaller farms, beginning farmers and those with no farm management experience.



Use of Microloan
These loans can be used for all approved operating expenses as authorized by the FSA Operating Loan Program, including but not limited to:

-Initial start-up expenses;
-Annual expenses such as seed, fertilizer, utilities, land rents;
-Marketing and distribution expenses;
-Family living expenses;
-Purchase of livestock, equipment, and other materials essential to farm operations;
-Minor farm improvements such as wells and coolers.
-Hoop houses to extend the growing season;
-Essential tools;
-Irrigation;
-Delivery vehicles.

Security Requirements
Microloans for annual operating purposes:
-Must be secured by a first lien on a farm property or agricultural products with a security value of at least 100% of the loan amount, and up to 150% when availalbe.

Microloans for purposes other than annual operating expenses:
-Must be secured by a first lien position on a farm property or agricultural prodcuts purchased with loan funds and having a security value of at least 100% of microloan amount

Rates & Terms
-Up to $50,000 for eligible applicants
-Repayment term may vary and will not exceed seven years
-Annual operating loans are repaid within 12 months or when the agricultural commodities produced are sold.
-Interest rates are based on the regular Operating Loan rates at the time of the microloan approval or microloan closing, whichever is less.

For an application please contact your local FSA office.

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