FSA Loans for Socially Disadvantaged Farmers and Ranchers: Qualifying with Bad Credit

FSA loans are great tools to use if you are a farmer. The ability to get a guaranteed government loan can open up a lot of opportunity for the right borrower. Providing opportunity is what the Loans for Socially Disadvantaged Farmers and Ranchers program is all about. This program gives a chance for socially disadvantaged people including women and minorities to get a loan for a family sized farm. If you fit into this category, you may be able to get a loan with favorable terms from the FSA. However, what if you have bad credit? Can you still be accepted?

Acceptable Credit

The language that the FSA uses to approve its loans is that you must have acceptable credit. What credit score that represents is debatable. However, "acceptable" is not nearly as stellar as your credit rating has to be for other types of loans. The FSA is well-known for working with people of all credit histories. Just the fact that they want to help out socially disadvantaged people should tell you that they are willing to work with you. If your credit is less than perfect, it is still worth a shot.

Commercial Lenders

While the FSA does provide loans on their own, they also guarantee loans from commercial lenders. This means that you have more loan options besides those that are provided directly from the FSA. Commercial lenders are likely to have many different loan options as well as loans for people with bad credit. Having more options to choose from for agricultural loans only helps your chances for approval. Many commercial lenders will have terms that are designed for people with bad credit. While it may not be the best loan in the marketplace, it will allow you to get approved and buy your farm.

Cosigner

Another option that you can use to help your approval chances is to you use a co-signor. Having someone with good credit cosign the loan for you will give you a better chance at being approved. If your credit score is less than perfect, having another person on the loan with you will allow you to use their credit score. As long as you are a member of a socially disadvantaged class, you should be able to use this strategy. They will look at the other person's credit score and even let you use their income to qualify for the loan. Be sure to select your cosigner on the loan carefully.