Financing for Family-Run Farms and Ranches: What You Need to Know

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Many Americans take out loans for residential real estate or even commercial real estate, but agriculture loans such as farm mortgages are entirely different. There are a number of FSA, or Farm Service Agency, loans available for various agricultural uses.

Direct Operating Loans

Direct Operating Loans are loans designated to be used for purchasing farm equipment; fuel; chemicals necessary to running a farm; insurance; livestock and feed; minor repairs or improvements to buildings and fencing; and even family living expenses. Basically, a Direct Operating Loan is to be used for costs associated with running, as opposed to purchasing, a farm or ranch.

Direct Farm Ownership Loans

Direct Farm Ownership Loans, in contrast, provide financing for purchasing or enlarging a farm or ranch, building new buildings or making major improvements to existing buildings. These types of loans can also be used for water and soil protection and conservation. Direct Farm Ownership Loans tend to be used for larger-scale purchases or even upscaling a farm or ranch, whereas Direct Operating Loans are used for day-to-day operating expenses.

Guaranteed Loans

Guaranteed Loans are a type of subsidized agriculture loan that allows lenders to offer financing to family farm operators who may not qualify for commercial loans. This sort of loan benefits both family farm owners as the borrowers as well as lending intuitions. Farmers and ranchers can qualify for financing at reasonable rates; lending intuitions are protected from loss, should a borrower default on the loan. Lenders also receive fees for offering this service and the potential of more business. This is a federally subsidized program, then, that benefits all parties.


Microloans through the FSA are intended for small start-up farms and specialty operations that may need to borrow only relatively small amounts. A benefit of Microloans is that they require less paperwork and have less stringent requirements than many other types of financing. Currently, there are two types of FSA microloans offered: Farm Operating Loans and Farm Ownership Loans. The differences between the two are the same as is discussed above. Individuals may borrow up to $50,000 as a Microloan.

Specialty Loans

In addition to the above, the FSA offers several specialty loans, including Emergency Loans and Native American Tribal Loans, as well as other loans aimed at specific targeted audiences.

Emergency Loans

Emergency Loans are financed by the FSA to assist farmers and ranchers in recovering physical and production losses due to natural disasters, such as flooding. Emergency Loans can also be issued to support farmers in recovery from quarantine.

Youth Loans

Youth Loans are available from the FSA to young people to finance income-producing, educational agricultural projects. Typically, these loans are issued to minors who are a part of 4-H of Future Farmers of America or other similar clubs.

Beginning Farmers and Ranchers Loans

Beginning Farmers and Ranchers Loans provide financing opportunities to family ranch and farm operators who have been in business for less than 10 years. Within this category, the FSA offers both regular and microloan options.

Minority and Women Farmers and Ranchers Loans

The FSA supports equal participation of women and minorities in its loan programs by targeting a portion of its funding for Direct and Guaranteed Farm Ownership and Operating Loans towards women and minority ranchers and farmers to purchase and operate farms. This group is sometimes referred to as Socially Disadvantaged Farmers and Ranchers.

What’s the Takeaway?

What you should know is that if you operate a family farm or ranch or would like to purchase or lease land, equipment, and other supplies to begin a family farm, the FSA offers many options. Not all will fit your needs, but certainly some are worth exploring.


Many small family farms and ranches have benefited from the financing offered by the FSA, whether they’ve borrowed from the FSA directly or have simply taken out a FSA backed loan through a private lender.