WASHINGTON (July 18, 2016) – Senators John Hoeven and Amy Klobuchar have introduced the Capital for Farmers and Ranchers Act. The legislation will increase the maximum loan amount that an individual farmer or rancher is able to receive under the Farm Service Agency’s Direct and Guaranteed Loan Programs for Farm Operating Loans and Farm Ownership Loans. Many producers are concerned that the current maximum loan amounts do not grant them the flexibility they need to operate in times of low commodity prices.

“This legislation will increase the FSA loan amounts for our farmers and ranchers, which is really important for them now so that they can get access to credit during these challenging times with low commodity prices,” Hoeven said. “It will help them to maintain their operations so that they can continue to provide affordable, high quality food to the American people.”

“Farmers and ranchers strengthen rural communities and form the backbone of our state’s economy,” Klobuchar said. “Our bipartisan legislation would help provide them with the support they need to start or grow their farming operations during tough economic times.”

The Hoeven-Klobuchar bill will help producers weather the downturn. For example, our bill doubles the cap on Direct Operating and Direct Farm Ownership Loans from $300,000 to $600,000. Similarly, it increases the loan cap for Guaranteed Operating Loans and Guaranteed Farm Ownership Loans from $1,399,000 to $2,500,000.

The farm loan programs include:

  • Direct Farm Loans – Provide loans designed to help family farmers to start, purchase, or expand their farming operation. In many cases, these are beginning farmers who need additional financial and business acumen to qualify for commercial credit. These include:
    • Direct Operating Loans – Used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. As well, it can be used for minor improvements to buildings, costs associated with land and water development, family living expenses, and to refinance debt in certain circumstances.
    • Direct Farm Ownership Loans – Used to purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, and to refinance debt.
  • Guaranteed Farm Loans – Provide lenders (commercial banks, small and community banks, Farm Credit System, credit unions) with a guarantee of up to 95 percent of the loss of principal and interest on a loan. These include:
    • Guaranteed Operating Loans – Used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. As well, it can be used for minor improvements to buildings, costs associated with land and water development, family living expenses, and to refinance debt in certain circumstances.
    • Guaranteed Farm Ownership Loans – Used to purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, and to refinance debt.