In addition to offering real estate loans (see that post here), the FSA (Farm Service Agency) also provides operating loans.
The guidelines for obtaining a beginners operating loan through the FSA aren’t as strict as those for getting a real estate loan.
- Potential borrowers may not have operated a farm or ranch for more than 10 years
- Borrowers must have either grown up on a farm or ranch or have at least 1 year of farm experience.
- Like the real estate loans, the FSA won’t loan over $300,000.
FSA operating loans are fixed at the current monthly interest rate (2.125 % for September 2011) for up to 7 years. Most often they lend money for livestock and equipment. They do provide yearly operating loans, but borrowers may only take out these loans 7 times in their lifetime.
All types of loans from the FSA are considered supervised loans and require more involvement from the lender. “The FSA is considered a temporary source of funding,” said Kati Bolte, FSA farm loan officer based in the Russell, Kansas office. “Our goal is to transition people into more traditional types of financing. But we provide a great place for people to get started.”
If you are looking at beginning to ranch, I highly recommend talking to the FSA first. Even if they can’t help you, they can steer you in the right direction.
My family is still working to pay off debt, but God willing, I hope in the next year or year and a half, we can be the ones talking to the FSA about buying our first ranch!
Visit the FSA for more information about their programs and offices near you.