Farm Operating Loans

FSA’s Direct Farm Operating Loans are a valuable resource to start, maintain and strengthen a farm or ranch. For new agricultural producers, FSA's Direct Farm Operating Loans provide an essential gateway into agricultural production by financing the cost of operating a farm.

Operating loans must be essential to the success of the farming operation and only for the following purposes:
Costs associated with reorganizing a farm to improve profitability;
Purchase of livestock, including poultry;
Purchase of farm equipment;
Farm operating expenses;
Minor improvements or repairs to buildings;
Refinance certain farm-related debts, excluding real estate;
Land and water development, use, or conservation; and
Loan closing and borrower training costs.

Eligibility

There are 2 different types of qualifications which need to be met: 1) eligible farm enterprise and 2) general eligibility requirements.

First, the operation must be an eligible farm enterprise. Operating loan funds cannot be used to finance nonfarm enterprises, such as exotic birds, tropical fish, dogs or horses used for non-farm purposes (racing, pleasure, show and boarding).

General eligibility requirements include:
not having Federal or State conviction(s) for planting, cultivating, growing, producing, harvesting, storing, trafficking, or possession of controlled substances;
the legal ability to accept responsibility for the loan obligation;
an acceptable credit history;
be a United States citizen, non-citizen national or legal resident alien of the United States;
no previous debt forgiveness by the Agency, including a guarantee loan loss payment;
being unable to obtain sufficient credit elsewhere, with or without an FSA loan guarantee;
no delinquency on a Federal debt, other than IRS tax debt, at the time of loan closing;
not being ineligible due to disqualification resulting from a Federal Crop Insurance violation; and
have sufficient managerial ability to assure a reasonable expectation of loan repayment.

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