August
2002
Emergency Loan Program
Overview
USDA’s
Farm Service Agency (FSA) provides emergency loans to help producers
recover from production and physical losses due to drought,
flooding, other natural disasters, or quarantine.
Loan
Uses
Emergency
loan funds may be used to:
- Restore
or replace essential property;
- Pay
all or part of production costs associated with the disaster
year;
- Pay
essential family living expenses;
- Reorganize the farming operation; and
- Refinance certain debts.
Eligibility
Emergency
loans may be made to farmers and ranchers who:
- Own
or operate land located in a county declared by the President
as a disaster area or designated by the Secretary of Agriculture
as a disaster area or quarantine area (for physical losses
only, the FSA Administrator may authorize emergency loan
assistance);
- Are
established family farm operators and have sufficient farming
or ranching experience;
- Are citizens or permanent residents of the United States;
- Have suffered at least a 30-percent loss in crop production
or a physical loss to livestock, livestock products, real
estate, or chattel property;
- Have an acceptable credit history;
- Are unable to receive credit from commercial sources;
- Can provide collateral to secure the loan; and
- Have repayment ability.
Loan
Requirements
FSA
loan requirements are different from those of other lenders.
Some of the more significant differences are the following:
- Borrowers
must keep acceptable farm records;
- Borrowers
must operate in accordance with a farm plan they develop
and agree to with local FSA staff; and
- Borrowers may be required to participate in a financial
management-training program and obtain crop insurance.
Collateral
is Required
All
emergency loans must be fully collateralized. The specific type
of collateral may vary depending on the loan purpose, repayment
ability and the individual circumstances of the applicant. If
applicants cannot provide adequate collateral, their repayment
ability may be considered as collateral to secure the loan.
A first lien is required on property or products acquired, produced,
or refinanced with loan funds.
Loan
Limit
Producers
can borrow up to 100 percent of actual production or physical
losses, to a maximum amount of $500,000.
Loan
Terms
Loans
for crop, livestock, and non-real estate losses are normally
repaid within 1 to 7 years; depending on the loan purpose, repayment
ability, and collateral available as loan security. In special
circumstances, terms of up to 20 years may be authorized. Loans
for physical losses to real estate are normally repaid within
30 years. In certain circumstances, repayment may be made over
a maximum of 40 years.
Interest
Rate
The
current annual interest rate for emergency loans is 3.75 percent.
Application
Deadline
Applications
for emergency loans must be received within 8 months of the
county’s disaster or quarantine designation date.
Temporary
Assistance
Borrowers
who receive temporary assistance are expected to return to conventional
credit sources. Emergency loans are a temporary source of credit,
and borrowers are reviewed periodically to determine whether
they can return to commercial credit.
For More
Information
Further
information on the emergency loan program is available from
local USDA Service Centers or on the FSA website at: www.fsa.usda.gov.
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