USDA Farm Loans

The USDA Farm Service Agency (FSA) operates the primary federal lending program for farmers and ranchers who cannot obtain conventional credit — providing direct loans (funded directly by the government), guaranteed loans (private lender loans backed by USDA), and emergency loans for farmers hit by natural disasters. The legal authority runs through 7 U.S.C. §§ 1922–1998. The program's scale: FSA has approximately $24 billion in outstanding direct loans and guarantees roughly $6–8 billion in new loans annually. Key loan types: Direct Farm Ownership Loans (up to $600,000, 40-year terms) to buy, expand, or improve farmland; Direct Operating Loans (up to $400,000, 7-year terms) for seeds, equipment, livestock, and annual operating costs; Guaranteed Farm Ownership and Operating Loans (up to $2,294,000 in 2026) through private lenders with USDA backing; and Microloans (up to $50,000) for small and beginning farmers with a streamlined application. Beginning farmers and socially disadvantaged farmers (women and minorities) receive priority access and favorable terms. Farm loans are a critical anti-failure tool: conventional lenders often won't extend credit to farmers with thin equity, operating losses, or weather-related cash flow problems — precisely the circumstances where FSA steps in.

Current Law (2026)

Legal Authority

• 7 U.S.C. § 1922 — Eligibility for real estate loans (farmers, ranchers, cooperatives in the U.S.)
• 7 U.S.C. § 1923 — Purposes of loans (buy/expand farm, capital improvements, closing costs, soil/water conservation)
• 7 U.S.C. § 1924 — Conservation loan and loan guarantee program (loans for conservation practices)
• 7 U.S.C. § 1925 — Loan limits (total indebtedness cap, tied to property value or statutory maximum)
• 7 U.S.C. § 1926 — Water and waste facility loans and grants (rural infrastructure including water, sewer, solid waste)
• 7 U.S.C. § 1926a — Emergency community water assistance grants (for water supply emergencies in rural areas)
• 7 U.S.C. § 1927 — Repayment requirements (40-year maximum, interest rate rules, borrower cash flow)
• 7 U.S.C. § 1928 — Full faith and credit (government guarantee backing)
• 7 U.S.C. § 1929 — Agricultural Credit Insurance Fund (revolving fund for loan insurance and guarantees)
• 7 U.S.C. § 1929a — Rural Development Insurance Fund (loans for rural community facilities and utilities)
• 7 U.S.C. § 1934 — Low-income farm ownership loans (special terms for beginning and socially disadvantaged farmers; down payment loan program with 5% borrower contribution)
• 7 U.S.C. § 1981b — Farm loan interest rates (statutory rules governing interest rate determination for direct farm loans)
• 7 U.S.C. § 1998 — Guaranteed farm loan programs (authority for USDA to guarantee up to 90-95% of loans made by commercial lenders to farmers)

How It Works

USDA Farm Loans are the federal government's program for providing credit to farmers and ranchers who cannot obtain commercial financing on reasonable terms (see also Federal Crop Insurance for the primary risk management safety net). Administered by the Farm Service Agency (FSA), these loans serve as a "lender of last resort" and a pathway for beginning farmers to enter agriculture.

FSA offers two delivery methods: direct loans (the government lends its own funds, with lower limits but below-market terms) and guaranteed loans (FSA backs up to 95% of a loan made by a commercial lender, enabling access to larger amounts through private lenders who bear reduced risk). For purchasing, expanding, or improving farmland, Direct Farm Ownership Loans top out at $600,000 (7 U.S.C. § 1923), while guaranteed Farm Ownership Loans reach $2,294,000 (adjusted annually under § 1998). The Down Payment Program — designed for beginning and socially disadvantaged farmers — requires just 5% down; FSA finances up to 45% at a below-market rate and a commercial lender covers the remaining 50%. Direct Operating Loans (capped at $400,000, terms up to 7 years) cover day-to-day farm expenses: seed, fertilizer (subject to pesticide regulation), livestock, equipment, and family living costs during the production cycle — critical for beginning farmers who lack the capital and credit history to obtain commercial operating lines.

Emergency Loans are available to farmers in counties with a USDA disaster designation, covering physical losses (damaged crops, livestock, buildings) and production losses, with interest rates set at the time of the loan and terms up to 40 years for real estate. Conservation Loans (§ 1924) finance on-farm conservation improvements — terraces, waterways, cover crops, irrigation efficiency — in either direct or guaranteed form, with terms tied to the useful life of the practice. All applicants must demonstrate inability to obtain credit elsewhere at reasonable terms, sufficient farming experience or training, family-farm scale, and no prior FSA direct loan written off (7 U.S.C. § 1922). Beginning farmers and socially disadvantaged farmers (women and minorities) receive priority access — FSA sets aside a portion of its annual loan funds specifically for these groups — along with enhanced terms through the Down Payment Program and reserved loan pools.

How It Affects You

If you're a beginning farmer trying to buy farmland: FSA's Down Payment Program may be your most realistic path to ownership. The structure: you put down just 5%, FSA lends up to 45% at a below-market direct loan interest rate (currently set based on the government's own cost of borrowing, typically well below commercial farm mortgage rates), and a commercial lender finances the remaining 50%. On a $500,000 farm, you're putting up $25,000 instead of the $100,000–$150,000 a conventional lender would require. Beginning farmer reserved loan funds — a portion of FSA's direct loan portfolio is set aside specifically for beginners — mean you're not competing for the same dollars as established operations. Apply at your local FSA county office (find yours at fsa.usda.gov/contact-us). The application requires a farm operating plan, balance sheet, income projections, and documentation of farming experience (can include education, apprenticeship, or apprenticeship-equivalent experience). Processing takes 60–90 days for direct loans. If you're also interested in transitioning to organic or sustainable practices, combine your FSA ownership loan application with an NRCS EQIP cost-share inquiry in the same visit.

If you're an established farmer facing a cash flow crisis or disaster: Two FSA tools are designed for exactly this situation. Emergency loans (7 U.S.C. § 1961) are available to farmers in counties with a USDA disaster designation — covering physical losses (damaged equipment, livestock, buildings) and production losses from drought, flood, or other natural disasters. Interest rates are set at the time of application and are typically below commercial rates. Direct operating loans (up to $400,000, 7-year terms) can bridge cash flow gaps when crop prices collapse or input costs spike. The critical rule: contact FSA before you default on commercial debt. FSA can sometimes guarantee restructured commercial debt through its loan guarantee program, allowing your commercial lender to accept terms they otherwise couldn't. A call to your county FSA office costs nothing; walking in after default limits your options significantly.

If you're a commercial bank or credit union making agricultural loans: FSA guaranteed loans (authority under § 1998) allow you to extend credit to farm borrowers who wouldn't qualify under standard underwriting by reducing your risk to just 5–10% of the loan amount. FSA guarantees up to 95% of the loan principal — meaning if a borrower defaults, you recover the guaranteed portion from FSA. Guaranteed loan limits reach $2,294,000 (2026, inflation-adjusted annually). This makes viable agricultural loans in segments — beginning farmers, socially disadvantaged farmers, farms recovering from disasters — that your own risk models might otherwise exclude. The application is submitted through your institution (not the borrower directly) via your FSA state office. Processing takes 30–60 days for guaranteed loans. Contact your state FSA office at fsa.usda.gov/contact-us to discuss preferred lender status, which streamlines the guarantee approval process.

If you live in a small town or rural area with water or infrastructure needs: The Water and Waste Disposal Loan and Grant Program (§ 1926) — administered by USDA Rural Development alongside FSA under the same statutory authority — funds water systems, sewer systems, and solid waste disposal infrastructure for communities of 10,000 or fewer residents. It's not a farm loan, but it's the primary federal capital source for rural water infrastructure that cities take for granted. A rural water district serving 1,000 households might fund a new water tower or treatment plant upgrade through a 40-year USDA direct loan at rates well below what a municipal bond would cost. Apply through USDA Rural Development at rd.usda.gov/contact-us; the program requires evidence of repayment ability and a letter certifying inability to obtain private financing on reasonable terms.

State Variations

USDA farm loans are a federal program with uniform national terms. However, practical differences exist:

• Local FSA offices: Each county has an FSA office with elected farmer committees who participate in loan decisions
• Land values: Loan limits interact differently with land markets — $600,000 buys a viable operation in some states but not in others
• State lending programs: Many states offer complementary farm loan programs (beginning farmer tax credits, linked deposit programs, state loan guarantees) that can stack with FSA programs

Implementing Regulations

• 7 CFR Parts 761–766 — Farm Service Agency farm loan program regulations covering direct and guaranteed farm ownership and operating loans, emergency loans, eligibility criteria, loan servicing, and collections.

7 CFR Part 761 — Farm Loan Programs; General Program Administration (40 sections — the cross-cutting administrative rules that govern FSA's entire direct and guaranteed farm loan portfolio; supplements the loan-specific rules in Parts 762–766 with fund allocation, borrower obligations, debt settlement, and supervised bank account requirements):

• Farm assessment and operating plan (§§ 761.103–761.105): before approving a direct loan, FSA conducts a farm assessment — reviewing the farm's financial position, organizational structure, management, and training needs; the borrower must provide a farm operating plan based on accurate, verifiable facts (at least 3 years of production history where available); FSA performs a financial analysis and updates it whenever the borrower shows financial distress, falls delinquent, or requests restructuring
• Loan limits and interest rates (§§ 761.8–761.9): the regulation sets aggregate debt caps: for Farm Ownership, Downpayment, Conservation, and Soil and Water loans, total direct loan debt at closing may not exceed a statutory maximum; interest rates are set by statute and updated by FSA — current rates are available at any Agency office; direct loans bear fixed rates while some guaranteed programs permit variable rates
• Fund allocation system (§§ 761.201–761.211): at the start of each fiscal year, the National Office allocates farm loan funds to State Offices using a formula based on historical program demand, projected needs, and statutory targets; beginning farmers receive a reserved portion of Farm Ownership and Operating loan funds under § 346(b)(2) of the Consolidated Farm and Rural Development Act; socially disadvantaged farmers have annual target participation rates set for each state and county; Conservation Loan (CL) funds are prioritized for beginning/socially disadvantaged farmers, borrowers converting to sustainable agriculture, and community facilities
• Supervised bank accounts (§§ 761.51–761.55): for large purchases, construction, or debt refinancing, FSA may require a supervised bank account — a joint-control account where funds can only be withdrawn for approved purposes with FSA concurrence; interest earned in the account offsets loan interest; accounts are closed when all approved purposes are completed and any remaining loan funds are applied to the outstanding balance
• Debt settlement (§§ 761.401–761.408): FSA may settle farm loan debts through compromise (lump-sum payment to clear remaining unsecured debt), adjustment (periodic payments over time), or cancellation (waiver of uncollectible debt); complete financial disclosure from all responsible parties is required; missed payments under an approved settlement void the agreement; FSA may grant exceptions to any Part 761 requirement for individual cases when strict application would harm the Agency's financial interest

7 CFR Part 762 — Guaranteed Farm Loans (75 sections across 10 subparts — the rules governing FSA's guarantee of loans made by commercial lenders, credit unions, and Farm Credit System institutions to farm borrowers; the guarantee covers up to 90–95% of the loan balance, meaning private lenders bear only a small slice of the default risk):

The guaranteed loan framework solves a structural problem: many creditworthy farmers can't get commercial loans because agricultural lending is cyclical, collateral-heavy, and hard for general-purpose banks to underwrite. FSA's guarantee takes the default risk off the commercial lender's balance sheet, making the loan bankable without requiring FSA to hold the capital or service the relationship. The lender originates, closes, and services the loan; FSA backs it.

• § 762.103 — Full faith and credit of the United States: once FSA issues a loan note guarantee (LNG), it is backed by the full faith and credit of the federal government; FSA may only refuse to honor the guarantee if the lender committed fraud, misrepresentation, or negligent loan origination — a high bar; lenders who receive a valid LNG can count on payment even if the borrower fails to qualify under post-origination review
• § 762.104 — Lender-borrower relationship: the guarantee covers the transaction between lender and FSA, not between borrower and FSA; borrowers may not appeal adverse lender credit decisions to FSA; if the lender declines to make the loan, FSA has no independent authority to compel it — the guaranteed program works only when a willing lender is found
• § 762.105 — Lender eligibility: to participate, a lender must demonstrate sufficient farm loan experience and the operational capacity to originate and service agricultural loans; FSA may suspend or revoke a lender's eligibility if it finds a pattern of sloppy underwriting, inadequate servicing, or failure to comply with loan conditions; approval as a guaranteed lender does not automatically mean approval for all loan types
• § 762.106 — Preferred Lender Program (PLP) and Certified Lender Program (CLP): lenders with strong track records in FSA guaranteed lending may qualify for PLP status (fastest processing — the lender makes the final credit decision and FSA approval is largely ministerial) or CLP status (expedited but FSA retains final approval authority); lenders must maintain PLP/CLP standards on an ongoing basis; FSA may revoke status for inadequate performance
• § 762.107 — Micro Lender Program (MLP): smaller lenders that originate FSA-guaranteed microloans (smaller, streamlined loans primarily for beginning and small-scale farmers) may apply for MLP status; MLP approval is limited to lenders who demonstrate they serve underserved borrowers in rural areas and have the capacity to administer a simpler loan product
• § 762.120 — Applicant eligibility: borrowers must be U.S. citizens (or permanent residents) engaged in or about to engage in farming; FSA imposes a hard disqualifier — any applicant who has caused the Agency a loss on three or more prior guaranteed or direct loans is permanently ineligible; borrowers must have adequate collateral, the legal capacity to contract, and demonstrated managerial ability; beginning and socially disadvantaged farmers receive priority consideration
• § 762.121 — Authorized loan purposes: guaranteed Farm Ownership loans may cover purchase, construction, or improvement of farm real estate, soil and water conservation practices, and refinancing qualifying debt; guaranteed Operating loans cover annual production expenses, feed, seed, fertilizer, pesticides, equipment, livestock, and essential family living expenses; Conservation loans cover installation of approved conservation practices; loans may not be made for entertainment, recreation, or non-farm purposes
• § 762.122 — Loan limitations: individual guaranteed loan balances are capped at statutory limits (currently $2,294,000 for FO, adjusted annually for inflation); aggregate guaranteed debt across all FLP programs may not exceed the statutory combined cap; guaranteed loans may not be used to refinance existing FSA direct loans (cross-program refinancing is prohibited to prevent FSA from guaranteeing its own outstanding direct loan exposure)
• § 762.123 — Insurance requirements: at closing, the borrower must provide proof of property insurance covering collateral to at least its appraised value, liability insurance in amounts acceptable to the lender, and — where applicable — crop insurance (required for farmers who have crop production as their primary repayment source); lenders must verify insurance is maintained annually and notify FSA of any lapse; loss of required coverage is an event of default

7 CFR Part 763 — Land Contract Guarantee Program (23 sections — the FSA rules governing a specialized seller-side guarantee that enables beginning and socially disadvantaged farmers to purchase farmland through seller financing; implements 7 U.S.C. § 1989). The Land Contract Guarantee Program is structurally different from the other programs in this Part: instead of guaranteeing a lender, FSA guarantees the seller. When a landowner agrees to sell farmland to a beginning or socially disadvantaged farmer on an installment land contract (seller carries the financing), FSA backs the seller against the buyer's default — making it financially safe for sellers to offer financing that commercial banks won't:

• § 763.1 — Two guarantee plans: sellers choose between (1) the prompt payment plan — FSA guarantees up to three annual installments plus property taxes and insurance for those years; or (2) the standard plan — FSA guarantees 90% of the unpaid principal balance; both plans run for a 10-year guarantee period regardless of the underlying contract term
• § 763.4 — Authorized purpose: the guarantee covers only the sale of a family farm from an eligible seller to an eligible beginning or socially disadvantaged farmer under a land contract (installment purchase); non-family farm sales, commercial real estate, and sales to established farmers are excluded
• § 763.5 — Seller eligibility: sellers must have legal capacity to contract, not be debarred from federal programs, and not have made false statements to FSA; corporate or entity sellers must have each member meet the same requirements
• § 763.6 — Purchase price cap: the farm's purchase price must be no more than $500,000 or the property's appraised current market value, whichever is less; properties appraised above $500,000 are simply ineligible — FSA will not guarantee partial amounts on higher-value farms
• § 763.7–763.9 — Application process: sellers contact FSA and receive a letter of interest; FSA must notify of missing information within 10 days and issue a decision within 30 calendar days of a complete application
• § 763.10 — Buyer feasibility: the buyer must provide a farm operating plan using at least 3 years of actual records (or documented sources for farmers with less history); FSA reviews projections for reasonableness — income and price assumptions must be backed by evidence
• § 763.11 — Guarantee agents: the prompt payment plan requires an approved escrow agent (title company, attorney, financial institution, or bonded organization); the standard plan requires an approved servicing agent (bonded commercial lending institution registered to provide collection services in the state)
• § 763.12 — Financing terms: buyer must make a minimum 5% down payment; seller's interest rate must be fixed and may not exceed the FSA direct farm ownership loan rate plus 3 percentage points; contract payments must amortize over at least 20 years; no balloon payments are allowed during the 10-year guarantee period
• § 763.20 — Delinquency: when the buyer misses a payment, the escrow or servicing agent sends written demand and notifies FSA; prompt payment plan claims are paid by FSA within 30 days after the annual installment was due; standard plan claims are paid when FSA determines the full amount due under the guarantee
• § 763.21 — FSA recovery: if FSA pays a loss claim to the seller, the buyer becomes a federal debtor to FSA; FSA uses all available collection tools including offset, wage garnishment, and referral to DOJ to recover paid claims
• § 763.23 — Guarantee termination: the guarantee ends when the buyer pays in full, FSA pays three annual installments (prompt payment plan), the 10-year guarantee period expires, or FSA and seller mutually agree to terminate

The Land Contract Guarantee is rarely discussed in farm financing guides because it's unusual — most government loan programs guarantee lenders, not sellers. Its practical effect is to expand the supply of seller-carried financing in agricultural real estate markets. Conventional banks don't typically offer installment land contracts; sellers who want to carry financing face the full risk of buyer default. The FSA guarantee removes that risk, making seller financing a viable option for farmland transfers where conventional lending gaps exist. Recent rulemakings: 79 FR 60744 (October 2014) updated program requirements; 81 FR 51284 (August 2016) made additional technical corrections.

7 CFR Part 764 — Direct Loan Making (56 sections across 11 subparts — the rules FSA uses when making a direct loan from government funds to a farm borrower who cannot get credit elsewhere):

FSA makes four main types of direct loans — Farm Ownership (FO) (buying or improving farmland), Operating Loan (OL) (operating expenses, equipment, livestock), Emergency Loan (EM) (disaster recovery), and Conservation Loan (CL) (conservation practice installation). Two specialized sub-types exist: Downpayment Loan (helping beginning and socially disadvantaged farmers buy land with a reduced down payment) and Youth Loan (up to $5,000 for youth agricultural projects under 4-H or FFA). All loans under Part 764 are limited to farming operations in the United States, and each borrower type has individual maximum loan limits (§ 764.102).

Key universal requirements (Subpart C — 8 sections):

• Collateral: must cover at least 100% of the loan (EM loans have different standards); if the borrower's own assets are insufficient, FSA may accept additional collateral from a cosigner (§ 764.103)
• Lien position: FSA takes a first lien on real estate whenever possible; a junior lien is acceptable only when the senior lien holder agrees in writing that FSA may proceed without consent for routine servicing (§ 764.104)
• Appraisal: all real estate collateral must be appraised per § 761.7; microloan farm ownership exceptions allow a simpler evaluation in lieu of a full appraisal (§ 764.107)
• Insurance: borrowers must maintain insurance covering the lesser of (a) the value of pledged collateral at closing or (b) the total outstanding balance on all FLP loans secured by that collateral (§ 764.108)
• Disqualification: any applicant or cosigner convicted of a controlled-substance felony is ineligible (§ 764.101)

Subpart K — Borrower Training (9 sections): FSA requires first-time direct loan borrowers to complete an approved borrower training program from a qualified vendor within 2 years of loan closing; training covers farm financial management, record-keeping, and business planning; FSA may waive this requirement for borrowers with sufficient prior experience or training credentials.

7 CFR Part 766 — Direct Loan Servicing — Special (62 sections across 10 subparts — the rules for FSA's workout programs for financially distressed direct loan borrowers who cannot make scheduled payments):

• Subpart C — Loan Servicing Programs (16 sections, §§ 766.101–766.120): FSA must notify eligible borrowers of available servicing programs when they show financial distress, fall 90 days past due, or request help (§ 766.101); a complete application requires 3 years of financial records, a balance sheet, and a farm plan; FSA must issue a decision within 60 calendar days (90 days if an appraisal is needed) (§ 766.106); servicing options are considered in order: conservation contracts first, then consolidation/rescheduling, then reamortization, then deferral, then write-down, then current market value buyout (§ 766.105); eligibility requires that the financial difficulty be caused by factors beyond the borrower's control — illness, natural disasters, low market prices, or unavoidable increases in operating costs (§ 766.104); write-down reduces the outstanding loan balance but requires that the borrower never previously received FSA debt forgiveness on a direct loan (§ 766.111); when loans are restructured, FSA must obtain additional collateral if available to bring total collateral to 125% of the loan (§ 766.112); current market value buyout lets a delinquent borrower pay off loans at the appraised value of pledged collateral plus non-essential assets, avoiding foreclosure while clearing the debt (§ 766.113)
• Subpart B — Disaster Set-Aside (10 sections): borrowers whose financial problems stem from a declared disaster may qualify for a temporary set-aside (deferral) of one or more loan payments; the set-aside is added to the end of the loan term
• Subpart D — Homestead Protection Program (5 sections, §§ 766.151–766.155): after FSA acquires collateral through foreclosure or voluntary conveyance, the former borrower (or surviving spouse) may apply to lease back up to the principal residence and 10 adjacent acres for up to 3 years, with a right of first refusal to purchase the property when FSA sells; homestead protection rights are not transferable to third parties (§ 766.153)
• Subpart E — Shared Appreciation Agreements and Net Recovery Buyout Agreements (6 sections): when FSA accepts less than full loan value through a write-down or buyout, it may require a shared appreciation agreement — if the borrower later sells the property for more than the buyout price, FSA receives a share of the gain
• Subpart G — Loan Servicing for Borrowers in Bankruptcy (3 sections): FSA may continue servicing direct loans for borrowers in bankruptcy proceedings consistent with the bankruptcy plan and applicable law; FSA must coordinate with DOJ if its claims are involved in the bankruptcy estate
• Subpart H — Loan Liquidation (8 sections): covers foreclosure, voluntary conveyance, and collection on charged-off accounts when other servicing options are exhausted or rejected

Part 766 is the safety net within the FSA direct loan safety net. Direct farm loans are already the lender of last resort — Part 766 governs what happens when even those loans go into distress. The program's workout structure (offering multiple restructuring options before moving to foreclosure) reflects the policy choice to keep farmers on the land rather than adding to rural foreclosure pressures, while protecting the federal financial interest through collateral maintenance requirements.

7 CFR Part 765 — Direct Loan Servicing — Regular (39 sections across 6 subparts — FSA's rules for ongoing servicing of current (non-delinquent) direct farm loan borrowers; covers graduation to private credit, payment processing, collateral management, and transfers; distressed/delinquent borrowers are handled under Part 766 instead):

• Graduation requirement (§§ 765.101–765.102): FSA's mission is to be a lender of last resort — not a permanent lender; FSA must periodically review borrowers and require them to graduate (refinance with private lenders) when they demonstrate they can obtain credit at reasonable rates and terms; borrowers who fail to meet graduation deadlines or provide required financial information have their loans accelerated; graduation strengthens the farm by transitioning borrowers to commercial credit, freeing FSA funds for new borrowers
• Payment application order (§ 765.153): regular loan payments are applied in a specific sequence — first to the annual operating loan, then to any delinquent FLP installments (by due date, oldest first), then to other FLP installments in due date order, then to other FLP loan balances; this sequencing ensures operating capital is replenished first so the farm can continue functioning
• Collateral protection charges (§ 765.203): when FSA must take actions to protect its loan security — paying delinquent property taxes on abandoned collateral, maintaining poorly kept property, or making emergency repairs — it charges the borrower for those protective advances, which bear interest and are added to the loan balance; FSA's lien position is updated as necessary under state law to cover newly advanced amounts
• Lien subordination (§ 765.205): FSA will subordinate its lien position to a new lender when the borrower needs additional credit and the subordination won't impair FSA's security; the borrower must submit a written application, current financial statements, and documentation that the new credit serves the loan purpose; subordination is conditional on the new credit being used for approved purposes
• Collateral sale and transfer (§§ 765.301–765.353): borrowers may not sell chattel (personal property) collateral without Agency approval; proceeds from approved sales must pay lienholders in priority order; real estate sales also require Agency approval; an appraisal is required for any collateral worth $50,000 or more; loan proceeds from the sale must be used to pay off outstanding liens rather than for other purposes
• Loan transfers and assumptions (§§ 765.401–765.406): a new eligible borrower may assume an FLP loan when property secured by that loan is transferred; the assuming party must meet FLP eligibility requirements; assumptions do not automatically release the original borrower from liability — the transferor can only be released with Agency written approval after the assuming party demonstrates satisfactory repayment capacity; ineligible assumers may take over at non-program rates and terms
• Servicemember protections (§ 765.161): borrowers who are called to active military duty receive protections under the Servicemembers Civil Relief Act, including interest rate caps and protection from foreclosure while on active duty; FSA applies these protections automatically without requiring borrowers to request them

7 CFR Part 769 — Farm Loan Programs Relending Programs (36 sections across 2 subparts — FSA's two relending programs that address land ownership equity for tribal and rural heirs property communities; FSA makes low-interest loans to certified intermediaries that relend the funds directly to eligible borrowers; implements 25 U.S.C. § 488 and 7 U.S.C. § 1989):

• Subpart B — Highly Fractionated Indian Land (HFIL) Loan Program (§§ 769.101–769.125): FSA lends to tribal and nonprofit intermediaries at a fixed rate of at least 1% per year (set by the FSA Administrator), and intermediaries relend from a dedicated HFIL revolving fund to eligible ultimate recipients — individual Tribal members, Tribes, and eligible Tribal entities — to purchase fractional interests in Indian land and consolidate fractionated ownership; the program addresses one of the most persistent barriers to productive agricultural use of allotted Indian lands: when land passes through multiple generations without clear estate planning, hundreds of small fractional interests accumulate, making it practically impossible for any single owner to farm or develop the parcel; eligible intermediaries include private or Tribal nonprofit corporations, state or local agencies, CDFIs, and federal agencies authorized to serve as intermediaries (§ 769.103); loan proceeds must flow into the intermediary's HFIL revolving fund — they cannot fund land improvements, equipment, operating costs, or finders' fees (§§ 769.105–769.106); security must be sufficient to make repayment likely given the intermediary's financial condition and management capacity (§ 769.108); HFIL revolving fund accounts must be maintained in a federally insured depository separate from other funds, and any funds not deployed must be kept in the account until all HFIL obligations are repaid (§ 769.121); any transfer or assumption of an HFIL loan requires prior Agency written approval (§ 769.123); 89 FR 65062 (August 2024) — most recent amendment, updating program terms
• Subpart C — Heirs Property Relending Program (HPRP) (§§ 769.150–769.168): FSA lends to certified Community Development Financial Institutions (CDFIs) at a fixed rate of 1% or less (§ 769.156), and CDFIs relend to eligible ultimate recipients — family members who co-own agricultural land with unclear title due to intestate succession (heirs property) — to resolve ownership and clear title on the land; heirs property arises when agricultural land passes through generations without formal estate documents, creating many co-owners none of whom has a clear individual title; this ambiguous ownership disqualifies heirs property from USDA farm program payments and prevents owners from obtaining conventional credit secured by the land; intermediaries must be CDFIs certified under 12 CFR § 1805.201 (§ 769.152); ultimate recipients must be family members of co-owners seeking to resolve ownership succession on a farm with multiple owners (§ 769.153); HPRP intermediary loan cap is $5,000,000 per application period (§ 769.155); at loan closing, intermediaries sign an HPRP loan agreement, promissory note, security agreement, and control agreement establishing the HPRP revolving fund (§ 769.163); intermediaries must maintain a separate HPRP revolving loan fund with complete records during the entire loan term (§ 769.164); 89 FR 65062–65063 (August 2024) — most recent amendment, aligning HPRP with updated FSA relending framework

7 CFR Part 770 — Indian Tribal Land Acquisition Loans: FSA rules governing direct loans to Native American tribes and tribal corporations to purchase land or land interests within their reservation or in Alaskan Native communities (implements 25 U.S.C. § 5136 — Indian Reorganization Act authority for tribal land acquisition; 7 U.S.C. § 1989):

• § 770.3 — Eligibility: applicants must be a federally recognized tribe or tribal corporation; the tribe must submit a complete FSA application and have an option or acceptable purchase agreement for the land to be acquired; the tribe must demonstrate legal authority to incur the debt and provide sufficient security
• § 770.4 — Authorized uses: loan proceeds may only be used to purchase land and land rights within the tribe's reservation (or an Alaskan community) — including fractional interests, rights-of-way, water rights, and mineral rights; loans may not fund land improvements, buildings, personal property, operating costs, or finder's fees; the restriction to reservation-boundary land distinguishes ITLAP from the broader HFIL program (Part 769)
• § 770.6 — Rates and terms: loans are repaid over a maximum of 40 years; the interest rate is the lower of the rate in effect when the loan is approved or when it closes — whichever benefits the borrower; rates are updated by FSA and available at any FSA office
• § 770.7 — Security: the borrower must provide a mortgage or deed of trust on the land being purchased; for trust or restricted land where the tribe's constitution or charter prevents a conventional mortgage, alternative security arrangements may be accepted with FSA approval
• § 770.10 — Servicing flexibility: for a tribe in serious financial difficulty, FSA may modify loan terms, lower the interest rate, defer payments, exchange land, reduce principal, or use reserve funds; reamortization requires a new application and demonstration that restructured payments are feasible

The Indian Tribal Land Acquisition Program (ITLAP) uses FSA's farm loan infrastructure to help tribes reconsolidate land that was lost or fragmented through the allotment era. It complements the Part 769 Highly Fractionated Indian Land program — ITLAP allows direct tribe-to-seller purchase with FSA as the lender, while the HFIL program works through intermediaries to address fractional interests. Together they represent FSA's toolkit for addressing the land-tenure challenges that limit agricultural productivity on reservation lands.

Minor Program Loan Servicing

7 CFR Part 772 — Servicing Minor Program Loans: FSA rules governing the ongoing servicing, transfer, graduation, and liquidation of FSA's "minor program" loan portfolio — primarily Grazing Association Loans, Irrigation and Drainage Association Loans (IMP loans), and certain individual loans for non-farm purposes originally made under area-wide multi-purpose (AMP) programs (implements 7 U.S.C. § 1989 and 25 U.S.C. § 490):

• § 772.1 — Scope: covers three categories of older FSA direct loans — grazing association loans made to associations operating grazing districts, irrigation and drainage association loans made to associations managing water delivery infrastructure, and AMP loans made to individuals for non-agricultural rural purposes; these are legacy programs not currently making new loans, but existing portfolios require ongoing servicing
• § 772.10–772.11 — Transfer and assumption: the Agency may approve a transfer of an AMP or IMP loan to a new borrower when the current borrower cannot or will not meet the loan's objectives, the transfer will not harm the government's security position, and the assuming party is eligible and financially capable; for IMP (irrigation/drainage) loans, the transfer follows the same rules as 7 CFR Part 765 (regular direct loan servicing)
• § 772.12 — Graduation: borrowers in the minor programs whose promissory notes require graduation from FSA to commercial credit must provide current financial records when the Agency requests a graduation review; the FSA's mission as a lender of last resort extends to minor programs — borrowers who demonstrate creditworthiness must obtain private financing
• § 772.13–772.14 — Delinquency and reamortization: delinquent AMP borrowers who do not cure defaults after notice face liquidation unless eligible for reamortization; AMP loan reamortization (extending or restructuring the payment schedule) is available when the borrower can show the restructured payments are feasible, no new encumbrances are placed on collateral, and the final maturity date is not extended beyond the original loan term
• § 772.15 — Protective advances: the Agency may advance funds to pay insurance premiums or real estate taxes on AMP loan collateral when the loan agreement permits; protective advances are added to the outstanding loan balance and bear interest at the original loan rate; they protect the government's security position when a borrower stops paying property expenses
• § 772.16 — Liquidation: if the Agency determines that continuing servicing will not achieve the loan's objectives and the borrower's problems cannot be resolved through delinquency servicing or reamortization, the Agency will liquidate the collateral to recover what it can on the outstanding balance
• § 772.18 — Exception authority: the FSA Administrator may approve an exception to any Part 772 rule for an individual case when strict application would harm the government's financial interests; exceptions must be documented

Minor program loans are a legacy portfolio — FSA no longer originates grazing association loans, irrigation district loans, or AMP non-farm loans under these categories, but hundreds of millions in existing balances remain. Part 772 governs the end-of-life servicing for this portfolio: ensuring orderly repayment, managing defaults, and closing out accounts. Borrowers in these programs are often water districts, grazing cooperatives, or small rural communities that depend on FSA's willingness to work through restructuring rather than immediate foreclosure — the same patient-lender approach that characterizes FSA's farm loan programs generally.

Certified Mediation Program

7 CFR Part 785 — Certified Mediation Program: FSA certification of state agricultural mediation programs and federal grants to operate them (implements 7 U.S.C. §§ 5101–5104, Agricultural Credit Act of 1987):

• § 785.3 — Annual certification: to be certified and receive federal grant funds, a state must submit an annual application including a written description of its mediation program and a certification from the Governor or designated state agency head confirming the program meets program requirements; applications for next-fiscal-year certification and grant funding must be submitted by August 1 of the current year
• § 785.4 — Grants to states: states with certified programs may receive federal grants to fund mediation services; grant amounts are published in FSA program notices; qualifying mediation programs must provide mediation services to agricultural producers facing financial stress, including disputes with USDA agencies, creditors, state agencies, local governments, and other agricultural parties
• § 785.5 — Fees: states may charge fees to parties who are not USDA when they participate in mediation (creditors, lenders, state agencies); charging reasonable fees does not affect a program's eligibility for certification or federal grant funding — the fee policy is left to state discretion
• § 785.6 — Mandatory use by USDA agencies: when a borrower or agricultural producer requests mediation through a state certified mediation program, USDA agencies — including FSA — must participate in good faith before taking adverse actions; this gives producers a formal avenue to contest FSA loan decisions, servicing denials, and program eligibility determinations through an independent mediator before administrative appeal or litigation
• § 785.8 — Qualifications of mediators: mediators must be trained, qualified, and impartial; states must ensure mediator training covers agricultural financial issues, mediation techniques, and program requirements; FSA reviews mediator qualification standards as part of the certification review
• § 785.10 — Penalties for non-compliance: if a state program fails to meet certification requirements, the FSA Administrator may revoke certification, suspend the federal grant, require the return of unspent grant funds, require repayment of funds spent on ineligible activities, or impose other appropriate remedies; states may request reconsideration under § 785.11

Agricultural mediation fills a critical gap in the farm credit system: USDA direct loan borrowers facing foreclosure or denial of loan servicing have formal appeal rights, but those rights run through USDA's own National Appeals Division — meaning the agency both makes the adverse decision and hears the first appeal. State certified mediation programs provide a neutral third-party forum where a farmer can work through a dispute with FSA, a commercial lender, or an input supplier before reaching the formal appeal stage. Mediation is particularly effective in farm loan workout situations — a mediator can facilitate a restructuring agreement that both the lender and borrower accept, avoiding the cost and delay of foreclosure proceedings. Mediation is confidential, voluntary for both parties (except USDA's duty to participate in good faith), and often resolves disputes in one or a few sessions. Recent rulemakings: 73 FR 65330 (November 2008) updated certification requirements; the program was reauthorized in the 2014 and 2018 Farm Bills.

• 7 CFR Part 780 — FSA Appeal Regulations: the informal appeals framework for farmers and program participants challenging Farm Service Agency program decisions — the procedural rights tier below NAD (National Appeals Division) for FSA direct and guaranteed loan decisions, commodity and conservation program determinations, and CCC program decisions (implements 16 U.S.C. § 590h — ACP authority; 7 U.S.C. § 6995 — NAD jurisdiction):

  • § 780.4 — Applicable decisions: Part 780 governs appeals of FSA decisions about making, guaranteeing, or servicing farm loans (chapters VII and XVIII), and domestic FSA program decisions covering commodity price support, conservation compliance, and disaster assistance; decisions that are specifically excluded include broad program rules that apply to everyone, mathematical formulas set by statute, and decisions that a law expressly makes final
  • § 780.5 — Non-appealable decisions: certain FSA decisions cannot go through informal appeal — programmatic rules that apply to all program participants are policy decisions not subject to individual challenge; if a participant believes a FSA-wide rule is illegal, they must pursue judicial review, not an agency appeal; payment limitation formulas fixed by statute and their mathematically determined results are not appealable because FSA has no discretion to change them
  • § 780.6 — Available pathways: for most FSA program decisions, participants can choose: (1) reconsideration by the original decision-maker; (2) appeal to the county committee; (3) mediation; or (4) escalation to NAD; participants do not have to exhaust county committee appeal before requesting NAD review, but mediation must precede a NAD hearing
  • § 780.7 — Reconsideration: a participant may request reconsideration in writing from the FSA decision-maker; the request must be sent to the office where the adverse decision originated; FSA will re-examine the facts and the applicable rules and issue a revised or affirmed decision in writing
  • § 780.8 — County committee appeals: to appeal a county staff decision, the participant sends a written request to the county FSA office; the Federal Rules of Evidence do not apply in county committee hearings — informal evidence is admissible; the county committee issues a written decision after the hearing
  • § 780.9 — Mediation: a participant may request mediation after receiving an adverse decision but must request it before any NAD hearing; each decision or the main factual issues in it can go to mediation only once; USDA is obligated to participate in good faith; the mediator is neutral and cannot force either party to accept a settlement
  • § 780.10 — State committee appeals: to challenge a county committee decision, the participant sends a written appeal to the state committee; the state committee holds a de novo review and may reverse the county committee's decision
  • § 780.15 — Notice and deadlines: FSA must send written notice of an adverse decision within 10 business days; participants requesting an appealability review from the State Executive Director for a potentially non-appealable decision must do so within 30 calendar days of the adverse decision
  • § 780.16 — Implementation of final decisions: FSA must implement any final USDA administrative decision within 30 calendar days whenever practicable

  Part 780's informal appeal structure matters because it is faster and cheaper than NAD proceedings or federal litigation. A county committee appeal hearing typically takes 30–60 days; a NAD hearing takes longer and may involve more formal procedures. Many FSA disputes — especially about whether a farm qualifies for a disaster payment or whether a loan servicing request was correctly evaluated — can be resolved at the county or state committee level by presenting documentation the original decision-maker didn't have. The mediation requirement before NAD (§ 780.9) channels many disputes toward settlement rather than formal adjudication.

FSA Inventory Property Management

7 CFR Part 767 — Inventory Property Management: FSA rules governing how the Agency acquires, manages, leases, and sells real estate and personal property it takes into inventory — primarily farmland acquired through foreclosure, voluntary conveyance, or abandonment when borrowers cannot repay direct farm loans (implements 7 U.S.C. § 1989):

• § 767.51 — Property abandonment: when a borrower abandons security property, FSA must take immediate steps to protect and preserve it — maintaining the property, managing operations, and marketing or selling perishable items when that serves the Agency's financial interest; FSA bears custody until the property is sold or otherwise disposed of
• § 767.52 — Personal property disposition: when personal items are left on land FSA acquires, FSA must notify the former owner and known lienholders before disposing of items; valuable personal property may be sold at public sale; former owners and lienholders may reclaim items before the sale date
• § 767.101 — Leasing real estate inventory: FSA may lease inventory real estate to: (1) a former owner under the Homestead Protection Program (allowing displaced families to remain on their land temporarily; see also Part 766 Subpart D); (2) a beginning farmer who was selected as the buyer but cannot yet obtain FSA loan funds; or (3) when the property cannot be sold or the Agency determines leasing serves its financial interest; lease payments to a buyer do not reduce the ultimate purchase price
• § 767.151 — Priority sale to beginning and socially disadvantaged farmers: FSA must offer inventory property first to beginning farmers and socially disadvantaged farmers before advertising to the general public; FSA may split or combine parcels to give these priority buyers a better opportunity to purchase a farm that is viable at their scale; any property that can support a farm operation must be offered first through priority channels
• § 767.152 — Advertising exceptions: FSA will delay or skip advertising inventory property in limited circumstances — including when a lease to a beginning farmer has just ended and FSA still has direct or guaranteed loan funds available to help that farmer purchase the property; the exception prevents FSA from undercutting its own preferential buyer programs
• § 767.153 — Market-value sales: FSA must sell inventory real estate at market value as determined by an independent appraisal; properties sold at auction or sealed bid go to the highest bidder, but FSA may reject any or all bids if none reaches an acceptable price; appraisals are conducted under the Agency's appraisal rules in § 761.7
• § 767.155 — Chattel property sales: FSA sells movable property (equipment, livestock, fixtures) by sealed bid or public auction; the Agency may sell chattel together with real estate in a combined sale if doing so yields a higher aggregate price
• § 767.201 — Important resources (wetlands, habitat): FSA must protect significant natural resources on inventory land by placing permanent conservation easements before sale; all wetlands and converted wetlands that were not cropland when acquired receive permanent wetland easements — these run with the land and bind all future owners; FSA also places deed restrictions on properties with endangered species habitat or other significant natural resources to prevent incompatible uses regardless of who buys the land
• § 767.202 — Special hazard areas: inventory property in designated flood hazard areas, mudslide zones, or earthquake hazard areas receives a deed restriction prohibiting residential use if FSA determines the property is unsafe; leasees of property in special hazard areas must obtain and maintain flood insurance throughout the lease term

Part 767 inventory management is the concluding chapter in the FSA direct loan lifecycle. When a borrower defaults and all servicing options (restructuring, write-down, current market value buyout under Part 766) are exhausted, FSA takes the collateral into inventory and Part 767 governs what happens next. The priority sale provisions for beginning and socially disadvantaged farmers reflect a deliberate policy choice: farmland that flows through the FSA loan program should stay in production agriculture, and preference buyers who might otherwise be priced out of the market get first access. The permanent conservation easements on wetlands mean that federally financed farmland with wetland resources retains those resources in perpetuity regardless of later sale — a meaningful environmental condition attached to the government's investment in rural land.

Pending Legislation

• HR 7609 — Rural Development Modernization Act: raises rural population cutoff to 25,000 for USDA programs. Status: Introduced.
• S 4236 — Expands USDA rural development loan eligibility. Status: Introduced.

Recent Developments

FSA has modernized its loan application process, reducing paperwork and processing times. Guaranteed loan limits are now adjusted annually for inflation. The 2018 Farm Bill expanded beginning farmer provisions and increased the microloan limit (a streamlined small loan product) to $50,000.

• Tariff shock and farm loan demand (2025-2026): The Trump administration's sweeping tariff actions — 145% tariffs on Chinese goods, 25% on Canadian and Mexican agricultural equipment and inputs — significantly increased farm operating costs and disrupted export markets for corn, soybeans, and pork. USDA's Farm Service Agency reported a 22% increase in Emergency Loan applications in the first half of 2025 as commodity prices fell on retaliatory tariff fears. China's retaliatory tariffs on U.S. agricultural products — reinstated and expanded in March 2025 — directly affected soybean and pork producers who had rebuilt export relationships after the first Trump trade war.
• Farm Bill delay and FSA program continuity: The 2018 Farm Bill expired in September 2023 and has been operating under one-year extensions. No comprehensive Farm Bill has been enacted since 2018; H.R. 7567 passed the House on April 30, 2026 but had not been enacted by the Senate. FSA's farm loan programs operate under current authority regardless of Farm Bill status, but the absence of a new Farm Bill has frozen commodity support payment formulas at 2018 reference prices — increasingly misaligned with current production costs and market conditions.
• Beginning farmer and racial equity provisions — status: The Biden administration's USDA made beginning farmer and socially disadvantaged farmer outreach a priority, including loan set-asides and targeted technical assistance. The Trump administration reversed several race-conscious outreach programs following SFFA v. Harvard (2023) and executive orders on DEI. FSA restructured its outreach to be income-based rather than race-based; beginning farmer loan set-asides remain in statute but some targeted assistance programs were modified or suspended.
• Digital FSA applications and loan processing modernization: FSA completed rollout of its online loan application portal (FarmLoan) in 2024-2025, allowing farmers to apply for direct and guaranteed loans without visiting a county office. The modernization reduces processing time from an average of 90+ days to approximately 45 days for complete applications. DOGE reviewed FSA's IT modernization budget in 2025, ultimately preserving loan processing system investments as mission-critical while recommending consolidation of FSA county office footprint (some rural counties share FSA staff with NRCS).