WASHINGTON — The U.S. Department of Agriculture is announcing a higher loan limit will be available for borrowers seeking a guaranteed farm loan starting Oct. 1, 2021, from $1.776 million to $1.825 million.
“Farm loans are critical for our customers’ annual operating and family living expenses, emergency needs, and cash flow,” FSA Administrator Zach Ducheneaux said. “Raising the guaranteed loan limit will allow FSA to better meet the financial needs of producers as natural disasters and the pandemic continue to impact their operations.”
FSA farm loans offer access to funding for a wide range of producer needs, from securing land to financing the purchase of equipment. Guaranteed loans are financed and serviced by commercial lenders. FSA provides up to a 95% guarantee against possible financial loss of principal and interest. Guaranteed loans can be used for both farm ownership and operating purposes.
USDA has additional support available to producers given the recent outbreaks of the COVID-19 Delta variant and has extended the availability of COVID-19 Disaster Set-Aside (DSA) for installments due through Jan. 31, 2022. In addition, FSA will permit a second DSA for COVID-19 and a second DSA for natural disasters for those who had an initial COVID-19 DSA. Requests for a COVID-19 DSA or a second DSA must be received no later than May 1, 2022.
Last year, FSA broadened the use of the DSA. Normally used in the wake of natural disasters, the DSA can now allow farmers with USDA farm loans who are affected by COVID-19 and determined to be eligible, to have their next payment set aside. The set-aside payment’s due date is moved to the final maturity date of the loan or extended up to 12 months in the case of an annual operating loan. Any principal set-aside will continue to accrue interest until it is repaid. This will improve the borrower’s cashflow in the current production cycle.