May 2007
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).
An FSA farm storage facility loan must be approved by the local FSA county committee before any site preparation and/or construction can be started.
The following are eligible types of facilities and upgrades that can be paid for with farm storage facility loans:
- New conventional type cribs or bins designed and engineered for whole grain storage having a useful life of at least 10 years.
- New oxygen-limiting and other upright silo-type structures designed for whole grain wet storage having a useful life of at least 10 years.
- New flat-type storage structures, with permanent floors and bulkheads, designed and primarily used to store whole grain for the loan term.
- New electrical equipment integral to the proper operation of the grain storage and handling equipment, excluding the installation of electrical service to the electrical meter.
- New safety equipment, as required by CCC and meeting the U.S. Department of Labor's Occupational Safety and Health Organization (OSHA) requirements, such as interior and exterior ladders and lighting.
- New equipment to improve, maintain, or monitor the quality of stored grain, such as cleaners, moisture testers, and heat detectors, in conjunction with a proposed storage facility.
- New concrete foundations, aprons, pits, and pads, including site preparation, labor and material, essential to the proper operation of the grain storage and handling equipment.
- Re-manufactured oxygen-limiting storage structures built to the original manufacturer's design specifications using original manufacturer's rebuild kits designed for whole grain storage or other than whole grain storage and having a useful life of at least 10 years.
- Renovation of existing farm storage facilities, under certain circumstances, if the renovation is for maintaining or replacing items that have a useful life of at least 10 years.
- New permanently affixed grain handling and grain drying equipment determined by CCC to be needed and essential to the proper operation of a grain storage system (with or without a loan for the storage facility).
- New structures that are bunker-type, horizontal or open silo structures, with at least 2 concrete walls and a concrete floor, designed for whole grain storage or other-than-whole-grain storage and having a useful life of at least 10 years.
Notes: - Scales, portable dryers, used bins, and used equipment are not eligible for financing.
- Facilities built for commercial purposes and not for the sole use of the borrower(s) are not eligible for financing.
The net cost for building or upgrading farm storage and handling facilities and equipment may include the following:
- Purchase price and sales tax.
- Shipping and delivery charges.
- New material and labor for concrete pads, electrical wiring, and electric motors.
- New on-farm material approved by FSA.
- Attorney or archaeological study fees.
An eligible borrower is any person who is a landowner, landlord, leaseholder, tenant or sharecropper who:
- Has a satisfactory credit rating as determined by CCC.
- Demonstrates the ability to repay the debt for the facility loan.
- Possesses no delinquent non-tax federal debt.
- Produces corn, grain sorghum, rice, soybeans, oats, peanuts, wheat, or minor oilseeds harvested as whole grain. Also eligible are corn, grain sorghum, wheat, oats or barley harvested as other-than-whole grain.
- Demonstrates a storage need based on the borrower's three-year-average acreage and share of production, minus any current storage available.
- Provides proof of multi-peril crop insurance from the Federal Crop Insurance Corporation (FCIC) or a private company for the life of the loan.
- Provides all peril insurance and, if applicable, flood insurance with CCC as a loss payee.
- Demonstrates compliance with USDA provisions for highly erodible land and wetlands.
- Demonstrates compliance with the National Environmental Policy Act.
- Demonstrates compliance with any applicable local zoning, land use, and building codes.
- Has not been convicted of a controlled substance violation.
The following are security requirements for farm storage facility loans:
- All loans must be secured by a promissory note and security agreement, as well as a UCC-1 describing the storage facility and accompanying equipment; and
- Severance agreements from all lien holders on the real estate where the facility will be located or from owners of real estate when the loan applicant is not the landowner, except when CCC holds the first lien on the real estate.
For loans that exceed $50,000 or the borrower's aggregate outstanding loan balance exceeds $50,000, the borrower must be able to provide at least one of the following:
- A first lien on the real estate on which the facility is located;
- Real estate other than where the facility is located, provided the real estate offered is sufficient to secure the loan; or
- A letter of credit from a financial institution in an amount sufficient to protect CCC's interest for each year the loan has an outstanding balance.
The maximum amount a person is allowed to borrow through the Farm Storage Facility Loan Program is $100,000.
The following are the terms for farm storage facility loans:
- A 15 percent cash down payment is required; thus, CCC's loan is limited to 85 percent of the net cost of the eligible storage facility and permanent drying and handling equipment (subject to the applicant's storage needs test). The down payment cannot include any trade-in, discount, rebate, deferred payment, or post-dated check.
- Loan term is seven (7) years.
- Interest rate is fixed for the loan term based on the rate in effect during the month the loan is approved. The interest rate is derived from comparable 3?8 year T-bonds.
- Loans are to be repaid in equal amortized installments.
- Loan will not be disbursed until the facility has been erected and inspected.
- Applicants will be charged a nonrefundable $45 application fee.
- CCC will pay all collateral lien searches and recording fees for filing Form UCC-1 and credit reports.
- Applicants pay all other fees, such as severance agreements, attorney fees, real estate lien search fees, and instrument filing fees.
- For loans over $50,000, applicants will be required to pay the cost of obtaining a title search/opinion or title insurance.
The following persons are required to sign the loan agreement:
- For sole proprietorships, all individuals, including spouses, if applicable.
- For general and limited partnerships, all partners.
- For corporations, stockholders or principals.
Loan applications should be filed in the administrative FSA Office that maintains the farm's records.
For more information about FSA programs, contact your local FSA office or USDA Service Center, or visit the World Wide Web at www.fsa.usda.gov
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of Discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW., Washington, DC 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer.
|
|
|
|
