FSA Loans for Socially Disadvantaged Farmers and Ranchers: Benefits

FSA loans for socially disadvantaged farmers and ranchers allow people who wouldn't normally be able to get a loan obtain the money they need. Anyone who is in a minority class or a woman fits into this category of people. The program is designed to get these people to purchase family-sized farms to live and work on. There are many advantages and benefits to potential users of this program. Here are a few things to consider with this type of loan program.

Low Interest Rates

Agricultural loans that are provided by the FSA are always going to be low interest loans. Since they are provided by the government, the rate will only be slightly above the federal reserve rate. This small interest rate will allow you to save thousands on interest payments over the life of your loan. You will enjoy a smaller payment which can come in handy during tough months on the farm. 

Government Backed

If you decide to go through a commercial lender, the government will still back the loan. This means that you will not have to pay any kind of private mortgage insurance on the loan. This will save you money in the long run and you are also more likely to be approved. If the bank does not have to guarantee the loan, then they will be more than happy to approve you. They can make money with virtually no risk.

Long-Term Loans

Owning a farm is a long-term investment. In many cases it can take years before you see a profit. When you have to buy land, equipment, livestock, and many other things, a loan really needs to be long-term. Otherwise, you will not be able to pay it off in most cases. With most loans that are backed by the FSA, you will receive a loan term of at least 20 years. This will allow you plenty of time to establish a successful farm and start to make some money to pay back the loan. 

Equal Playing Field

This type of small business loan allows those that are not used to getting the breaks they need an equal playing field. They designed the program to remove any possible barriers to success for those of a socially disadvantaged group. This is a great tool for members of these groups as they can now enjoy the same benefits as those of other social groups. Leveling the playing field so that everyone can enjoy the same opportunities is important and this loan program does exactly that.