FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

AUTHORIZATION:

Consolidated Farm and Rural Development Act, as amended, Subtitle C, Sections 321-330, Public Law 92-419, 7 U.S.C. 1961- 1984; Public Law 96-438; Public Law 97-35; Public Law 98-258; Public Law 99-198; Public Law 100-233; Public Law 100-387; Public Law 101-624.

OBJECTIVES:

To assist established (owner or tenant) family farmers, ranchers and aquaculture operators with loans to cover losses resulting from major and/or natural disasters, which can be used for annual farm operating expenses, and for other essential needs necessary to return disaster victims' farming operations to a financially sound basis in order that they will be able to return to private sources of credit as soon as possible.

TYPES OF ASSISTANCE:

Direct Loans.

USES AND USE RESTRICTIONS:

Loan funds may be used to repair, restore, or replace damaged or destroyed farm property (real and chattel) and supplies which were lost or damaged as a direct result of a natural disaster; under certain conditions, refinance secured and unsecured debts made necessary by the disasters; finance adjustments in the farming, ranching or aquaculture operation(s) determined necessary to restore or maintain applicants' operations on a sound financial basis equivalent to their predisaster potential. The total of all actual loss loans is based on actual dollar value of production and physical losses. Loans are made at 3.75 percent interest, with a maximum limit of 80 percent of the actual production loss and 100 percent of the actual physical loss, or $500,000 total indebtedness. Loans are made in counties: (1) Named by the Federal Emergency Management Agency as being eligible for Federal assistance under a major disaster or emergency declaration by the President; (2) designated as natural disaster areas by the Secretary of Agriculture; and (3) designated by the FSA Administrator for severe physical losses, only, as a result of a natural disaster.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   Requires that an applicant: (a) Not have caused a loss to the Agency after April 4, 1996, or received debt forgiveness on no more than 1 occasion prior to April 4, 1996. (b) be an established family farmer, rancher, or aquaculture operator (either tenant-operator or owner-operator), who was conducting a farming operation at the time of occurrence of the disaster either as an individual proprietorship, a partnership, a cooperative, a corporation, or a joint operation; (c) have suffered qualifying crop loss and/or physical property damage caused by a designated natural disaster; (d) be a citizen of the United States or legal resident alien, or be operated by citizens and/or resident aliens owning over a 50 percent interest of the farming entity; (e) be unable to obtain suitable credit from any other source(s) to qualify for subsidized loss loans; (f) have sufficient training or farming experience in managing and operating a farm or ranch (1 year's complete production and marketing cycle within the last 5 years immediately preceding the application); (g) be able to realistically project a feasible and sound plan of operation; (h) be a capable manager of the farming, ranching, or aquaculture operations (in the case of a cooperative, corporation, partnership or joint operation, if members, stockholders, partners or joint operators own a majority interest and are related by blood or marriage, at least one member, stockholder, partner or joint operator must operate the family farm; if not related, the majority interest holder(s) must operate the family farm); (I) have legal capacity to contract for the loan; (j) obtain eligibility certification; (k) provide adequate collateral to secure the loan request; (l) have crop insurance if available for affected crops comply with the highly erodible land and wetland conservation provisions of Public Law 99-198 (16 U.S.C. 3801 et seq.), (Title 12 and 13) the Food Security Act of 1985 and the Food, Agriculture, Conservation, and Trade Act of 1990. Applicants who cannot meet all of these requirements are not eligible. Assistance is available in the 50 States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and, to the extent the Secretary determines it to be feasible and appropriate, the Trust Territories of the Pacific Islands, when those areas (by county) are designated.

Beneficiary Eligibility:   Applicants/borrowers are the direct beneficiaries when they meet all eligibility criteria. Families, individuals and entities who are farmers, ranchers or aquaculture operators are the beneficiaries.

Credentials/Documentation:   Applicants must establish that substantial physical property damage and/or severe production losses, caused by the designated natural disaster, has occurred. To qualify for loss loans, the applicant must be unable to get credit elsewhere and demonstrate repayment ability on the loan. This program is excluded from coverage under OMB Circular No. A-87.

APPLICATION AND AWARD PROCESS:

Preapplication Coordination:   None. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.

Application Procedure:   Application Form FMHA 410-1 provided by the Farm Service Agency must be presented, with supporting information, to the FSA county office serving the applicant's county. FSA personnel assist applicants in completing their application forms. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure:   FSA Farm Loan Manager, State Executive Directors, and the Administrator or his designee are authorized to approve these loans, subject to certain administrative requirements, after applicants are determined eligible.

Deadlines:   Deadline for filing applications for actual loss loans is 8 months from the date of declaration/designation for both physical and production losses. Applicants should consult the FSA county office serving their area for application deadlines.

Range of Approval/Disapproval Time:   Applications must be approved or disapproved within 60 calendar days after the receipt of a completed application by the County Office.

Appeals:   Applicants for loans may appeal adverse actions taken. The applicant is given an opportunity to appeal the decision to the National Appeals Division.

Renewals:   Rescheduling, reamortization, consolidation and deferment: Up to 15 years rescheduling for short and intermediate term loans made for production-type losses. Long term loans may be reamortized. However, the maximum statutory repayment period of 40 years for real-estate purposes cannot be exceeded. Loans made for similar purposes can be consolidated and rescheduled or reamortized. Generally, real estate will be needed as security when a term of more than 7 years is authorized.

ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:   None.

Length and Time Phasing of Assistance:   This varies in accordance with individual case needs, type of disaster losses, type of security available, and borrower's repayment ability. Applicants should consult the FSA county office serving their area for specific information.

POST ASSISTANCE REQUIREMENTS:

Reports:   Borrowers are required to account for all security property.

Audits:   This varies in individual cases.

Records:   Applicants must furnish 5 year history of farm production, if available, when production losses are claimed. Otherwise, FSA records of acres grown and proven yields, county or State production averages, or combinations of the above records when approved, are used. Borrowers must keep adequate records as a condition for receiving FSA financing. Specific financial information is required to be maintained for 3 years for some borrowers as a condition of receiving loan assistance.

FINANCIAL INFORMATION:

Account Identification:   12-4140-0-3-351.

Obligations:   (Direct Loans) FY 99 $329,849,000; FY 00 est $572,000,000; and FY 01 est $150,065,000.

Range and Average of Financial Assistance:   $500 to $500,000; $58,000.

PROGAM ACCOMPLISHMENTS:

In fiscal year 1999, there were 3,970 loans obligated.

REGULATIONS, GUIDELINES, AND LITERATURE:

(1) Farm Service Agency Fact Sheets, Program Aids 1610 'Farm Service Agency Producer's Guide to Loan Programs", and 1632, "Natural Disaster Assistance." Administrative regulations are published in the Federal Register at 7 CFR Chapter XVIII, Part 1945, Subparts A, and D.

INFORMATION CONTACTS: