FSA Loans for Farm Storage Facilities: Advantages

FSA loans are extended directly through the USDA and Farm Service Agency to producers in need. The agency supports producers in need of appropriate storage facilities for storage and handling of certain commodities and livestock. Ultimately, if you meet the qualifications for an FSA loan, it will be a better option than a private agricultural loan because it is subsidized by the federal government.

Low Interest Rates

The main purpose of the farm storage facility loan program is to provide low-interest financing. Your exact credit score or asset strength will not truly affect your interest rate. Instead, if you qualify, you will see a fairly consistent, low interest rate across the board. Especially at times when private financing is very expensive, the federal government offers loan programs at a low rate to simulate financial growth. The government is not as concerned with making a profit as simply encouraging your development and making back the initial principal plus the cost of inflation. When you compare private and public loans, you will almost always find the public loan program is more cost-effective.

High Limits

The farm storage facility loan program has relatively high limits. As of 2009, the limits were set at $500,000. This is typically high enough to cover the majority of the needed financing for a new facility. Additional financing can be obtained through a private lender at a low rate since you already have the government-backed loan. The first $50,000 of any storage loan can be secured with a promissory note instead of personal collateral. If you need a relatively inexpensive piece of storage equipment, you can obtain this without even collateralizing your farm. You will only need to show you have the funds to pay off the loan in your investments or savings.

Most Facilities Qualify

There are some facilities that do not qualify for a farm storage facility loan. These include used facilities and portable facilities. All facilities must also meet federal and state requirements and regulations. However, the vast majority of facilities do meet the standards for the loans. This means you will have a large degree of flexibility in terms of qualifying for the federal program. Unlike private loan programs, which tend to charge more based on the type of structure, the federal program is generally consistent across all areas.

High Approval Rate

You are not truly seeking a small business loan. Rather, the storage facility must be used for private usage and meet other basic requirements. Among these are certain personal financial requirements. Since the loan is not business-contingent, however, you will find a high approval rating on these rural loans. If you determine you meet the standards set forward in terms of the type of commodity you produce, the type of facility you are building or purchasing and basic personal financial requirements, which tend to be lower on government loans than private loans, the process will be nearly guaranteed.