FSA reprograms $185M for farm operating loans
September 8, 2016
The Agriculture Department's Farm Service Agency has reprogrammed $185 million to address a backlog of direct and guaranteed farm operating loan applications, enough to service 1,900 approved applicants, FSA Administrator Val Dolcini announced last week, but farm groups say more money is needed.
The funds were reprogrammed with the approval of Congress and will allow the agency to address up to 30 percent of its projected shortfall of funds until the next federal fiscal year begins on October 1, FSA said in a news release.
"Some of our farming and ranching customers are experiencing challenges due to market conditions and have been on a wait list for up to 60 days, so this will help those applicants whose paperwork has been pending the longest period of time to obtain credit or restructure loans as needed," said Dolcini.
"While the backlog in loan applications will grow between now and the end of the fiscal year, it is important for borrowers to continue to apply since we will process loans on a first-come-first-served basis based on the application date, once funding is replenished in fiscal year 2017."
“Some of our farming and ranching customers are experiencing challenges due to market conditions and have been on a wait list for up to 60 days, so this will help those applicants whose paperwork has been pending the longest period of time to obtain credit or restructure loans as needed.” Val Dolcini, FSA administrator
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In fiscal year 2016, FSA has guaranteed loans to more than 6,400 customers for farm ownership and operating purposes.
USDA also reminded lenders and potential borrowers of the loan guarantee programs available from the Small Business Administration (SBA) that can be used for similar purposes as FSA guaranteed loans.
"SBA fully supports our small business owners in the agriculture industry. For this fiscal year, as of July, more than $629 million in SBA loans have been provided to this community. We encourage agricultural small business owners and their lenders to look at all SBA has to offer," said SBA Associate Administrator for Capital Access, Ann Marie Mehlum.
"Although SBA has different rates, terms, fees, limits and percentages than FSA loans, they can provide an alternative for banks and other lenders that are working to provide farmers and ranchers with guaranteed loans," said Dolcini.
National Farmers Union President Roger Johnson said the reprogramming "is greatly appreciated; however, this additional funding will only alleviate approximately 30 percent of FSA's projected shortfall of funds before the next fiscal year."
"NFU has been in constant contact with members of Congress and the USDA over the need for additional credit," Johnson said. "We are thankful they heard our message and acted swiftly to aid producers.
"We are also confident that they understand that additional steps are needed for those who have been approved for FSA loans but are part of the backlog. NFU members will be in Washington during the September session urging members of Congress to use the month to address the additional credit needs of struggling producers," Johnson said.
The National Sustainable Agriculture Coalition also praised USDA and congressional appropriators for agreeing to reprogram the money, but said, "While these funds will largely wipe out the backlog of borrowers for direct federal loans, a sizeable number of borrowers who are currently working with private lenders but are in need of federal loan guarantees will remain."
NSAC noted that it had joined eight national farm and financial organizations in June in appealing Congress to take action to deal with the demand for FSA loans.
"We can expect to see an increase in demand for these operating loans next year, and there will likely remain some level of backlog, so allocating the appropriate amount of funding in the final omnibus appropriations bill for fiscal year 2017 will be critical," said Ferd Hoefner, the Washington policy director for NSAC.
Sen. John Hoeven, R-N.D., praised the reprogramming of funds, noting that he had written Agriculture Secretary Tom Vilsack urging him to address the issue.
"These FSA loan programs exist to help our farmers and ranchers weather low prices and keep their operations going," Hoeven said.
"When the programs faced a shortfall due to the rapid increase in demand for loans, we worked with USDA and our colleagues in the Appropriations Committees of both chambers to reprogram FSA funding to open up more loan authority. This means our ag producers will have access to more capital to get them through these tough times."
Hoeven also noted that he and Sen. Amy Klobuchar, D-Minn., have introduced the Capital for Farmers and Ranchers Act, which would increase the maximum loan amount that an individual farmer or rancher is able to receive under the FSA's loan and loan guarantee programs.
Specifically, it increases the FSA loan guarantee amount to cover up to $2.5 million, up from $1.39 million, and doubles the amount on direct operating and direct farm ownership loans from $300,000 to $600,000.
–The Hagstrom Report