Lenders urge higher FSA loan limits and prequalification to get young farmers into land
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Summary
Bankers and Farm Credit witnesses told senators that raising FSA loan limits, modernizing lending authority and allowing prequalification would help beginning and small farmers gain access to land and equipment when auction and sale windows are short.
Bankers and Farm Credit witnesses urged the Senate Agriculture Committee to modernize USDA lending authorities and raise guaranteed and direct loan limits so lenders can better serve beginning and small farmers.
Tara Durbin of Farm Credit Mid America said increasing guaranteed ownership limits would allow associations to make more loans to customers who otherwise would not qualify for traditional credit. In response to questions about raising guaranteed ownership loan limits, Durbin said the guarantee program "allows us to loan to more customers, to more farmers, and help them get their operations up and going." Caleb Hopkins of the American Bankers Association said faster prequalification by FSA would be particularly useful because many farm properties are sold at auction with only four to six weeks' notice.
Why it matters: Witnesses said the combination of higher land prices and rising capital costs requires updates to statutory loan limits and program features so lenders can provide timely capital and young producers can compete in auctions or other short-notice sales.
Legislative and program proposals discussed: Senators and witnesses referenced the PACE Act (to align FSA loan limits with current costs), and bipartisan proposals to increase direct and guaranteed loan limits. Senator Hoeven and others outlined specific limit increases being considered in committee drafts: for example, proposed increases to guaranteed ownership loans to roughly $3 million and higher microloan limits (from $50,000 to $100,000) were discussed by witnesses as meaningful steps. Senators and witnesses also supported pilot prequalification authority to allow borrowers to be ready to bid at auctions.
Supporting details: Hopkins said proactive education and prequalification would put beginning farmers in a stronger position to pursue land acquisition. Farm Credit’s Growing Forward program was cited as an example of lender-side underwriting flexibility and education targeted at young and beginning producers.