As globalization becomes a greater reality in our national economy, commodity exports have seen sharp declines in value. America’s agricultural community has suffered greatly, and the prevalence of agricultural loans is at an all time high. To make the problem worse, many commercial lenders are afraid to issue loans to upstart operations or others impacted by sluggish commerce.
The federal government has responded to this crisis by offering more generous and comprehensive programs under the Farm Service Agency, a division of the United States Department of Agriculture. The FSA has created loans styled to help farmers who are ineligible for private lending programs to achieve independence from federal assistance and eventually sustain profitability.
In order to help a farm operation receive private loans, the FSA will assign an agent to help asses the issues stifling progress as well as prioritize the areas that need improvement. The government will work with farmers hands on to figure out the best way to qualify for a loan guarantee, and once it does, it will insure anywhere from 90 to 95 percent of that loan under strict requirements.
Congress allots a certain amount of the federal budget each year for this purpose, and the FSA basically ensures that it will not be guaranteeing bad loans. It must approve whatever private loan is potentially being issued, and part of this process means evaluating an agriculture operation’s ability to make repayments in the future. Payment plans can last as little as five years and as long as 40, depending on the circumstances.