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Farm storage facility loans available

Monday, September 19, 2011

The Farm Storage Facility Loan (FSFL) program allows producers of eligible commodities to obtain low-interest financing to build or upgrade farm storage and handling facilities.

The maximum principal amount of a loan through FSFL is $500,000. Participants are required to provide a minimum down payment of 15 percent, with CCC providing a loan for the remaining 85 percent of the net cost of the eligible storage facility and permanent drying and handling equipment. If a participant provides 20% or greater down payment, then the requirement for a severance agreement for loans under $50,000 will be waived. Loan terms of 7, 10 or 12 years are available depending on the amount of the loan. Interest rates for each term rate may be different and are based on the rate which CCC borrows from the Treasury Department.

Payments are available in the form of a partial disbursement and the remaining final disbursement. The partial disbursement will be available after a portion of the construction has been completed. The final fund disbursement will be made when all construction is completed. The maximum amount of the partial disbursement will be 50 percent of the projected and approved total loan amount not to exceed $250,000.

Applications for FSFL must be submitted to the FSA county office that maintains the farm's records. An FSFL must be approved before any site preparation or construction can begin.

The following commodities are eligible for farm storage facility loans:

--Corn, grain sorghum, rice, soybeans, oats, peanuts, wheat, barley or minor oilseeds harvested as whole grain

--Corn, grain sorghum, wheat, oats or barley harvested as other-than-whole grain

--Pulse crops - lentils, small chickpeas and dry peas

--Honey

--Hay

--Renewable biomass

--Fruits (including nuts) and vegetables - cold storage facilities

A non-refundable $100 application fee is required. Interest rates for loans approved in September

--7-year -- 1.875%

--10-year -- 2.500%

--12-year -- 2.875 %

Marketing

assistance loans available

A Marketing Assistance Loan (MAL) is available to producers who share in the risk of producing a crop. The program provides a low-interest loan on farm stored or warehouse stored harvested commodities. This 9-month loan can help producers with cash-flow if they are not ready to sell the crop at harvest.

To be eligible, a producer must maintain continual beneficial interest in the crop from harvest through the earlier of the date the loan is repaid or CCC takes title to the commodity.

Beneficial interest means retaining the ability to make decisions about the commodity; responsibility for loss or damage to the commodity; and title to the commodity. Once beneficial interest in a commodity is lost, the commodity is ineligible for loan -- even if the producer regains beneficial interest.

Commodity loan eligibility also requires compliance with conservation and wetland protection requirements; beneficial interest requirements, acreage reporting and ensuring that the commodity meets Commodity Credit Corporation minimum grade and quality standards. For commodities to be eligible they must have been produced by an eligible producer, be in existence and in a storable condition and be merchantable for food, feed or other uses as determined by CCC. The quality of the commodity in farm storage must be maintained throughout the term of the loan.

Producers do not have to participate in the Direct and Counter-Cyclical and/or ACRE Programs to be eligible for commodity loans, however farms participating in the ACRE program forego a 30% reduction in the loan rate.

The interest rate for loans approved in September is 1.125%. The service fee is $45 per loan.

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