 
To: corporations-ate-my-cat+@andrew.cmu.edu
Subject: FmHA Farm Loan info
From: wce@hogbbs.scol.pa.us (Bill Eichman)
Comments: Validated
Message-ID: 
Date: 	Thu, 14 Jul 1994 12:08:54 -0400
Organization: The Heart of Gold BBS, State College, PA

I've been scanning in some government loan info to store as files, and 
thought I'd post one to give folks a taste of how the gov handles these 
sorts of things.

It was interesting to see that the gov would loan to "corporations and 
co-operatives" as well as individuals, and that they would approve loansd 
that included a variety of non-farm business, including campgrounds, 
nature centers, and craftsmans shops.

There are other loans that are targeted to non-profit corporations for 
the express purpose of buying and developing land to be used to provide 
housing to low&moderate income renters and buyers. I tyhink there's a 
very serious possibility that this could be used to get seed money for 
certain types of community ventures.

I talked to a old college buddy of mine who's now an attorney in State 
College, and who knows well my interest in cvommunity building. I asked 
him to be the pro bono (free) attorney-of-record for the non-profit i am 
planning. He got a big smile on his face and said "Yes, definitely...".

Later, Bill

====================================================================



 FARM OWNERSHIP LOANS
 Farmer's Home Administration
 United States Department of Agriculture
 Program Aid Number 62

 Farm Ownership Loans
 --------------------

      The Farmers Home Administration (FmHA) makes and
 guarantees farm ownership loans and provides technical management
 assistance to eligible applicants who will operate family-
 size farms. These farms can be operated by individuals,
 partnerships, joint operators, cooperatives, or
 corporations.

     Insured loans are made directly from an FmHA revolving fund
 to the borrower. Guaranteed loans are made and serviced by
 usual commercial sources, such as Federal Land banks, local
 banks, insurance companies, and savings and loan
 associations. In these cases, FmHA provides the lender with
 a guarantee against losses on the loan.

      FmHA also makes farm ownership loans in participation
 with other lenders and sellers of farms who supply a part of
 the needed loan funds. In these cases, FmHA loans may be
 secured by a junior lien on the property.

      Each farm ownership loan is tailored to the borrower's
 needs. The lender or the FmHA county supervisor helps the
 borrower analyze the situation, determine available
 resources, and plan how these resources, plus the funds
 obtained by the loan, may be best used. Technical assistance
 helps the borrower solve problems that arise in making major
 adjustments in the operation and in adopting improved
 practices. Special emphasis is given to meeting the credit
 needs of limited resources borrowers and beginning farmers.

      Loans may be used to finance structures for farming
 enterprises that are consistent with local antipollution or
 environmental quality standards and regulations.

      All who apply get equal consideration without regard to
 sex, race, color, religion, national origin, marital status,
 age, or handicap.

 How Can Loan Funds Be Used?
 ---------------------------
      Farm ownership loans may be used to buy, improve, or
 enlarge farms. Funds can be used to construct, improve, or
 repair farm homes and farm service buildings, to drill wells
 and otherwise improve onfarm water supplies, to install
 pollution control measures, to develop energy conservation
 measures, and to refinance debts.


      In addition, these loans may be used to develop and
 improve farm land, clear and level land, establish and
 improve farm forests, provide drainage systems, carry out
 basic land treatment practices, and to make other
 improvements.

      Loan funds also may be used to provide facilities to
 produce fish under controlled conditions and to finance
 nonfarm enterprises which will help farmers supplement their
 farm incomes. To assist in these enterprises, loans can be
 used to develop land, construct buildings and other
 facilities, purchase equipment, and make other real estate.
 improvements.

      Nonfarm enterprises that may be financed on family
 farms include camping and swimming facilities, riding
 stables, lakes and ponds with docks for boating and fishing,
 nature trails, picnic grounds, repair shops, roadside
 markets, souvenir shops, craft and wood- or metal-working
 facilities, and small grocery stores or service station
 facilities.

 What are the Terms and Interest Rates?
 --------------------------------------

      Repayment terms and interest rates vary according to
 the type of loan made. Repayment is scheduled according to
 the borrower's ability to repay. The interest rate is set
 periodically, based on the cost of borrowing to the
 Government.

      A lower interest rate is available for borrowers with
 limited resources. Loans to limited resource borrowers will
 be reviewed each year and the interest rate increased if the
 borrower has sufficient repayment ability. If at any time,
 however, the borrower has sufficient income and repayment
 ability to pay the current rate then being charged, the
 borrower's interest rate will be increased to the current
 rate.

      For loans made by other lenders and guaranteed by Fm
 HA, the interest rate and payment terms will be agreed upon
 by the borrower and the lender. Interest rates on these
 loans may not exceed any maximum set by the Secretary of
 Agriculture.

      Each borrower who receives an insured loan is expected
 to refinance the unpaid balance of the loan when it is
 financially feasible to rely on commercial credit sources.

      Farm ownership borrowers are required to maintain their
 property, and pay taxes and property insurance premiums when
 due.


 Who Can Borrow?
 ---------------

      Individuals, partnerships, joint operations,
 cooperatives, and corporations primarily and directly
 engaged in farming and ranching on family-size operations
 may apply.

      To be eligible, an individual must:
      1. have a satisfactory history of meeting credit
 obligations, farm experience or training and possess the
 industry and ability needed to succeed in farming.
      2. be a citizen of the United States, (or a legal
 resident alien) which includes Puerto Rico, the Virgin
 Islands, Guam, American Samoa, and the Commonwealth of the
 Northern Mariana Islands.
      3. possesses the legal capacity to incur the
 obligations of a loan.
      4. be unable to obtain sufficient credit elsewhere at
 reasonable rates and terms to finance actual needs.
      5. be the owner-operator of not larger than a family
 farm after the loan is closed.
      6. need to rely on farm and other income to provide a
 level of living comparable to that considered reasonably
 adequate for the area the farm is located in.

      In the case of corporations, cooperatives, joint
 operations, or partnerships, the stockholders, members, or
 partners holding a majority interest must meet these same
 eligibility requirements, and the entity must be authorized
 to own and operate a farm or ranch in the state where the
 land is located. All borrowers must honestly try to carry
 out the conditions and terms of the loans.

      If the individuals holding a majority interest in the
 entity are related by blood or marriage, at least one
 stockholder, member, or partner must operate the family
 farm. If not related by blood or marriage, those members,
 stockholders, partners, or joint operators holding a
 majority interest in the entity must own and operate the
 farm.

      Corporations, cooperatives, joint operations, and
 partnerships consisting of one or more members,
 stockholders, partners, or joint operators who already have
 an FmHA farm ownership, soil and water, recreation, or
 operating loan, either individually or as a part of another
 entity, are not eligible for an FmHA farm ownership loan.

 Where To Apply for a Loan?
 --------------------------

 Apply at the office of a commercial lender for a guaranteed
 loan, and the FmHA county office serving the area where the
 property is located for an insured loan. If the office
 cannot be located in the local telephone directory under
 U.S. Department of Agriculture, write the farmers Home
 Administration, US Dep. of Agriculture, Washington, DC,
 20250


 Who Determines Eligibility?
 ---------------------------

 The county or area committee of the FmHA determines the
 eligibility of applicants. The committee consists of three
 persons who know local farming and credit conditions and
 what it takes to succeed. Before acting on an application,
 the committee may ask the applicant to meet with them, or
 they may ask to visit the farm.

 If the Applicant is Eligible, What's Next?
 ------------------------------------------

 The applicant will be assisted by the lender or the FmHA
 county supervisor in working out a plan to make the best use
 of land, labor, livestock, capital, and equipment. This plan
 will be a guide for the borrower to use in determining the
 soundness of the proposed operation and to follow in
 operating the farm or nonfarm enterprise. Before a loan is
 made, it must be clear that the borrower will have enough
 income to meet operating and family living expenses and to
 repay the loan and other debts. In all cases, labor must be
 provided by the operator and immediate family, except during
 seasonal peak-load periods.

 What Else is Involved?
 ----------------------

      In certain cases, the county supervisor will assist the
 applicant in contacting creditors to determine if existing
 debts can be adjusted or consolidated and repayments
 extended over a longer period of time.

      This credit service is designed to help those farmers
 who are in serious financial trouble and need assistance in
 working out the orderly settlement of their debts in line
 with their planned income.

 Is Other Management Help Available?
 -----------------------------------

      Farm ownership loans are accompanied by technical
 advice to help borrowers make profitable use of their land
 and water, labor, capital, and other resources. The borrower
 receives advice in keeping records of expenses and income
 and in budgeting and otherwise making wise use of income and
 credit. USDA agencies including FmHA are available to help
 the borrower with management problems.

 What Security Is Required?
 --------------------------

      Each loan will be adequately secured by real estate to
 protect the interests of the lender and the government.

 What Determines The Size Of The Loan?
 -------------------------------------

      The maximum outstanding principal balance for insured
 loans is $200,000 and for guaranteed loans $300,000. In
 addition, the loan may not exceed the market value of the
 farm or other security.

 Can a Farmer with Other Income Qualify?
 ---------------------------------------

 Yes, if otherwise eligible, and the nonfarm income is needed
 to supplement the farm income in order to provide a level of
 living comparable with that considered reasonable and
 adequate for the area.


 Does it Cost Anything to Apply for a Loan?
 ------------------------------------------

 No. If a loan is processed, however, the private lender of a
 guaranteed loan may charge a reasonable fee for service,
 appraisal, and other services.

 What Other Loans Does FmHA Make?
 --------------------------------
      Loans also may be made to buy livestock and equipment
 and pay farm and home operating expenses, to build and
 improve rural homes and essential farm service buildings, to
 provide rental housing, to develop water supplies and carry
 out soil conservation measures, to install rural water and
 waste disposal systems, to develop watersheds, to establish
 businesses and develop industry, and to meet emergency
 credit needs of farms.

 May Nonborrowers Obtain Financial Advice?
 -----------------------------------------

      Yes, lenders or county supervisors will do all that
 they can to help farmers find solutions to their financial
 problems. Sometimes it may only mean a close analysis of
 just how much a farmer can afford to borrow.

-------------------------------------------------------------
 Farmers Home Administration is an Equal Opportunity Lender.
 Complaints of discrimination should be sent to: Secretary of
 Agriculture, Washington, D.C. 20250.

 Revised March 1979.
 Slightly Revised August 1987.




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