Who Is Eligible For USDA Emergency Loans?

Who Is Eligible For USDA Emergency Loans?

If your county gets disaster designation due to drought, you may be eligible for low-interest USDA loan.

FAQ: It's been announced by USDA that farmers who have had major production or physical losses caused by the 2012 drought may be eligible to receive low interest emergency loans from USDA. What are the rules? Who qualifies?

Answer: As of August 2 there are 45 counties in Iowa eligible. Three were announced in late July and 42 more on August 1. Farm operators who have suffered major production and/or physical losses caused by drought beginning July 17, 2012 and continuing may be eligible for low-interest emergency loans from USDA.

Who Is Eligible For USDA Emergency Loans?

John Whitaker, executive director of USDA's Farm Service Agency in Iowa, issued a press release July 27 announcing USDA had designated three Iowa counties as part of a Secretarial Natural Disaster Designation. The secretarial designation was issued for 23 Wisconsin counties as the primary disaster area. The three Iowa counties are contiguous to this designated disaster area, making these producers also potentially eligible for programs based on this designation. The contiguous counties in Iowa are Allamakee, Clayton and Dubuque.

On August 1, USDA announced an additional 218 counties in 12 states, including 42 in Iowa, as disaster areas, making them eligible for low interest emergency loans. Nearly 1,600 U.S. counties, more than half of the counties in the nation, have been declared disaster areas in 2012 so far, most of them because of drought.

FSA makes Emergency Loans to eligible farmers who've had qualifying losses

The Farm Service Agency may make Emergency Loans to eligible family farmers which will enable them to return to their normal operations if they sustained qualifying losses resulting from natural disaster. Physical loss loans may be made to eligible farmers to enable them to repair or replace damaged or destroyed physical property, including livestock losses, essential to the success of the farming operation. Examples of property commonly affected include; essential farm buildings, fixtures to real estate, equipment, livestock, perennial crops, fruit and nut bearing trees, and harvested or stored crops.

For production loss loans, the disaster yield must be at least 30% below the normal production yield of the crop, on a crop or crops that make up a basic part of the total farming operation.

To qualify, you must be unable to get credit from usual commercial sources

Applicants must be unable to obtain credit from other usual sources to qualify for the Farm Service Agency Farm Loan Program assistance. The interest rate for emergency loans is 2.25%. Each applicant applying for credit will be given equal consideration without regard to race, creed, color, marital status, or national origin.

The repayment for most disaster loans are based on the useful life of the security, the applicant's repayment ability, and the type of loss. If the loan is secured only on crops, it must be repaid when the next crop year's income is received. Loans to replace fixtures to real estate may be scheduled for repayment for up to 40 years.

The final date for making application under this designation is March 25, 2013. Interested farmers may contact their local County FSA office for further information on eligibility requirements and application procedures for these and other programs. Information can also be found on-line at www.fsa.usda.gov.

TAGS: USDA
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