Farm Storage Facility Loan Program Security Changes
By Ryan Castle
Date Modified: 12/06/2012 2:33 PM
Producers should take advantage of the new changes to the Farm Storage Facility Loan Program. Recent security changes to the program now allow producers to obtain a Farm Storage Facility Loan for up to $100,000 with no need for additional security. This means that producers will not have to obtain a Letter of Credit or secure the loan with real estate unless the loan amount or aggregate loan amount exceeds $100,000. The previous program regulations required additional security with the loan amount or aggregate loan amount exceeded $50,000. The Minnesota FSA State Committee reserves the right to apply a more restrictive rule.
The Farm Storage Facility Loan Program provides low interest financing to producers for building and upgrading farm storage and handling facilities for either grain or hay
The new maximum loan amount is $500,000 and the interest rates vary by the term of the loan. Loan terms can range from seven to 12 years depending on the size of the loan.
The new rules allow for one partial disbursement if requested by the producer. The partial disbursement can be an amount up to 50 percent of the projected and approved loan amount not to exceed $250,000.
Loans that exceed $100,000 will require additional security, such as a lien on real estate or a Letter of Credit.
The following are the term options:
· $100,000 or less, the term is seven years only;
· $100,000.01 to $250,000, the producer can specify either seven or 10 years;
· $250,000.01 to $500,000, the producer can specify either seven, 10 or 12 years.
The following are eligible equipment:
· New grain bins, cribs and structures for hay storage
· New oxygen limiting and other upright silos
· New flat type storage structures
· New handling equipment such as grain legs and air transfer systems
· New drying equipment such as grain dryers
· New electrical equipment such as lighting, motors, wiring.
· Renovating existing structures - such as new concrete pads, full aeration floors, new rings on existing bins, upgrading and repairing grain legs.
· New components of used structures that are purchased and moved to a new location.