USDA FSA increases guaranteed loan limit for farmers

[December 06, 2011]  SPRINGFIELD -- The USDA Farm Service Agency state executive director, Scherrie Giamanco, announced Monday that the loan limit for the guaranteed loan program will increase to $1,214,000. The limit is adjusted annually based on the "Prices Paid to Farmers Index," compiled by the National Agricultural Statistics Service.

"Raising the guaranteed loan limit will allow FSA to better meet the financial needs of producers across the state," said Giamanco. "This increase comes at a time when Illinois agricultural producers are facing unprecedented economic hardships and need all of the means of obtaining capital they can get," she said.

Another change to the guaranteed loan program will affect the one-time loan guarantee fee charged on all FSA loans obligated after Oct. 1. The one-time loan guarantee fee will increase from 1.0 percent to 1.5 percent of the guaranteed portion of the loan.

FSA-guaranteed loans allow lenders to provide agricultural credit to farmers who do not meet the lender's normal underwriting criteria. Farmers and ranchers apply for a guaranteed loan through a commercial lender, and the lender arranges for the guarantee. FSA can guarantee up to 95 percent of the loss of principal and interest on a loan. Guaranteed loans can be used for both farm ownership and operating purposes.

Producers who are unable to obtain financing through a commercial lender, including a guaranteed loan, could be eligible for an FSA direct loan. These loans are made by FSA with government funds and the limit is $300,000 (except for emergency loans, which have a limit of $500,000). The maximum combined guaranteed and direct farm loan indebtedness is now $1,514,000.

For more information on FSA's farm loan programs, contact the farm loan manager at your local county USDA Service Center.

[Text from file received from the Illinois Farm Service Agency]