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10.407 FARM OWNERSHIP LOANS

FEDERAL AGENCY
FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

AUTHORIZATION
Consolidated Farm and Rural Development Act, as amended, Subtitle A, Sections 302, 310D, Public Laws 100-233, 87-128, 91-620, 95-334, 97-98, 7 U.S.C. 1922; Section 303, Public Laws 87-708, 90-488, 95-113, 96-438, 7 U.S.C. 1923; Section 305, Public Law 92-419, 7 U.S.C. 1925; Section 307, Public Law 97-35, 7 U.S.C. 1927; Section 308, Public Laws, 87-798, 89-240, 92-133, 7 U.S.C. 1928; 7 U.S.C. 1934.

OBJECTIVES
To assist eligible farmers, ranchers, and aquaculture operators, including farming cooperatives, corporations, partnerships, and joint operations, through the extension of credit and supervisory assistance to: Become owner-operators of not larger than family farms; make efficient use of the land, labor, and other resources; carry on sound and successful farming operations; and enable farm families to have a reasonable standard of living.

TYPES OF ASSISTANCE
Direct Loans; Guaranteed/Insured Loans.

USES AND USE RESTRICTIONS
Loan funds may be used to: (1) Enlarge, improve, and buy family farms; (2) provide necessary water and water facilities; (3) provide basic soil treatment and land conservation measures; (4) construct, repair, and improve essential buildings needed in the operation of a family farm; (5) construct or repair farm dwellings; (6) provide facilities to produce fish under controlled conditions.

Applicant Eligibility
An applicant must: (1) Not have caused a loss to the Agency after April 4, 1996, or received debt forgiveness on more than 3 occasions prior to April 4, 1996 to receive a guaranteed loan; (2) be unable to obtain suitable credit from other sources at reasonable rates and terms; (3) be a U.S. citizen or permanent resident and possess the legal capacity to incur the obligations of the loan; (4) have the necessary education and/or experience, training, and managerial ability to operate a family farm; (5) realistically project the ability to repay the loan; (6) be the owner-operator of a not larger than family farm after the loan is closed; and (7) if an individual, the applicant must not have a combined farm ownership, soil and water, and recreation loan indebtedness to FSA of more than $200,000, for direct loans; and $717,000 (amount adjusted annually for inflation) for a guaranteed loan(s), or a combination of direct and guaranteed indebtedness; or a total indebtedness against the property securing the loan(s) of more than the market value of the security, whichever is the lesser amount. If a cooperative, corporation, joint operation or partnership, the entity must be controlled by farmers or ranchers engaged primarily and directly in farming in the U.S., after the loan is made, and must consist of members, stockholders, partners, or joint operators (8) have a minimum of 3 years farming experience. Assistance is authorized for eligible applicants in the 50 States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and, to the extent the Secretary determines it to be feasible and appropriate, the Trust Territories of the Pacific Islands. Applicants must also comply with the highly erodible land and wetland conservation provisions of Public Law 99-198 of the Food Security Act of 1985 (FSA). To be eligible to obtain a direct loan, a borrower must abide by the Agency's borrower training requirements. Applicants/borrowers requesting guaranteed loan assistance must meet all lender requirements.

Beneficiary Eligibility
Applicants/borrowers are the direct beneficiaries and must meet the applicant eligibility requirements. Families, individuals, and entities who are farmers, ranchers or aquaculture operators are the beneficiaries.

Credentials/Documentation
Applicants must prove that credit is not available elsewhere for the requested purpose; and that they possess sufficient training or farm experience. This program is excluded from coverage under OMB Circular No. A-87.

Preapplication Coordination
An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.

Application Procedure
Applicants file Form FSA 410-1, Application for FSA Services, with supporting information, at the local county office of the Farm Service Agency for direct loans or Form FSA 1980-25 with the prospective lender for loan guarantees. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure
Certification as to eligibility is made the Agency credit officials and an approval determination is made by an FSA official based on loan feasibility and soundness, and adequate security.

Deadlines
None.

Range of Approval/Disapproval Time
The loan approval official must approve or disapproves a completed application within 30 days on a guaranteed loan application and 60 days on a direct loan application.

Appeals
Applicants for direct and guaranteed loans, may appeal adverse actions taken. The applicant is given an opportunity to appeal the decision to the National Appeals Staff. For guaranteed loans, both the lender and the applicant must request the appeal.

Renewals
Applicants may reapply at any time. Applicants denied assistance through the appeal process must establish that substantial change has occurred, since the denial decision.

Formula and Matching Requirements
The selected criteria identify essential elements considered necessary to compare the needs of the various States, and to make the best use of available program funds. This program has no statutory formula or matching requirements.

Length and Time Phasing of Assistance
Loans justified may be scheduled over a period up to 40 years. The interest rate for guaranteed loans is negotiated between the lender and borrower.

Reports
Not applicable.

Audits
Not applicable.

Records
Not applicable.

Account Identification
12-4140-0-3-351; 12-1140-0-1-351.

Obligations
(Direct Loans) FY 07 est $222,750,000; FY 08 est not available; and FY 09 est not reported. (Guaranteed Loans) FY 07 est $1,200,000,000; FY 08 est not available; and FY 09 est not reported.

Range and Average of Financial Assistance
Maximum direct $200,000, maximum guaranteed $731,000 (amount adjusted annually for inflation). Average direct $111,762, guaranteed $250,421.

PROGRAM ACCOMPLISHMENTS
Loans are used to purchase, enlarge, and improve family farms. In fiscal year 2001, 2,085 direct, and 3,488 guaranteed loans were made.

REGULATIONS, GUIDELINES, AND LITERATURE
7 CFR, Part 1943, Subpart A and Part 762. Farm Service Agency Fact Sheets; FSA Handbook 2 FLP; Program Aids 1610, "Farm Service Agency Producer's Guide to Loan Programs"; and 1620, "Lender's Guide to FSA Loan Programs."

Regional or Local Office
Contact the appropriate FSA State Office listed in Appendix IV of the Catalog.

Headquarters Office
Department of Agriculture, Farm Service Agency, Director, Loan Making Division, Ag Box 0522, Washington, DC 20250. Telephone: (202) 720-1632.

Web Site Address
http://www.fsa.usda.gov

RELATED PROGRAMS
10.406, Farm Operating Loans; 15.124, Indian Loans_Economic Development.

EXAMPLES OF FUNDED PROJECTS
Not applicable.

CRITERIA FOR SELECTING PROPOSALS
Not applicable.


General Services Administration
Office of Chief Acquisition Officer
Regulatory and Federal Assistance Division (VIR)