FSA Loans for Farm Storage Facilities: Loan Requirements

The Farm Service Agency, through the U.S. Department of Agriculture, provides low-interest FSA loans for farmers to upgrade or build storage and handling facilities. This is commonly called the Farm Storage Facility Loan Program. Like all government-sponsored loan programs, there are specific financial and usage requirements in order to qualify.

Eligible Commodities

Only certain commodities are eligible for storage facilities under the program. The USDA and FSA decide which commodities qualify on a yearly basis. This means the list is subject to some amount of change over time. The most common commodities used since the program was adopted include:

  • Corn, grain sorghum, rice, soybeans, oats, peanuts, wheat, barley and other items harvested as whole grain or other-than-whole grain commodities
  • Pulse crops
  • Hay
  • Renewable biomass
  • Fruits needing cold storage

Eligible Facilities

You will receive your small business loan only if the facility you are building meets the qualifications the USDA and FSA set. This means your facility will have to be up to the current standards including the types of materials used, emissions standards, safety standards and other requirements. These loans are extended to a number of different types of storage facilities all told. However, a few are excluded. The primary categories of excluded facilities include:

  • Scales, portable equipment and used equipment including bins
  • Storage facilities for commercial profit and not for the producer's own use
  • A complete list of eligible facilities can be located on the FSA website for Farm Storage Facility Loans:  http://www.fsa.usda.gov/FSA

Eligible Persons

Like all loans, the borrower’s financial history will be considered as the basis for financing. These loans also have unique requirements regarding the type of producer that is eligible for the loan. An eligible borrower must be a producer himself or herself, including a landowner, landlord, leaseholder, tenant or sharecropper. The producer must create a commodity that meets the requirements above, and that commodity must be stored for personal use alone. Further, the borrower must have a good credit score, show the ability to repay the rural loan, not owe any money in taxes, have a demonstrated need for the storage, have insurance and meet all government compliance regulations for a producer. If you do not know whether you meet these qualifications, it is possible to meet with a lender to assess your ability to obtain a federal loan based on these factors. 

Eligible Collateral

These loans are each secured. In some cases, they must be secured against either a person's personal assets. This is mostly true of loans exceeding $50,000. The loan can be secured against the property itself; farm property is the most common source of collateral for this type of loan. Loans under this limit may be secured with a promissory note. A promissory note is a letter from a bank or independent financier that guarantees payment if the borrower himself or herself defaults on the loan. The maximum limit for the loan is $500,000, so a number of loans will exceed the $50,000 unsecured limit and need to use the farm itself as collateral to achieve the agricultural loan.