Farm Services Agency (FSA) loans are often a farmer's last resort. Small Business Administration (SBA) loans are more likely to be useful in small, start-up operations. But with the agricultural economy in the Delta experiencing a downturn, they are viable options to consider.
  "The FSA is not in the business to compete," said John S. Porter, farm loan program chief of the Mississippi State Farm Services Agency. "We are a lender of last resort. Our goal is to help those who can't get the money from a private lender with or without a guarantee get back on their feet."
  For example, FSA's direct loan program, where Congress appropriates money, is made available through the U.S. Treasury and goes directly to borrowers, Porter said.
  "With the guaranteed loan program, another lending institution makes loans from its portfolio," he said. "The funds to cover it are appropriated through Congress, allocated to the states, the money goes directly to the farmer and all the FSA does is guarantee a percentage, usually 90%."
  Direct farm ownership loans, with a maximum loan amount of $200,000, are typically used to purchase land, construct buildings or make other types of improvements. With up to 40 years to repay, temporary limited resource interest rates, normally a few percentage points below normal interest rates, are available for farmers who need help getting started, he said.
  "A guaranteed farm ownership program has pretty much the same purpose, but the rates guaranteed by lenders cannot exceed those charged by lenders of other farm customers," he said. "Rates and terms are actually negotiated between the bank and the borrower. We look at them to make sure they are not excessive. Poultry loans, for example, usually do not exceed 15 years."
  The maximum loan amount for a guaranteed farm loan amount is $700,000 and is tied to the guaranteed operating loan program, in which farmers may purchase equipment or livestock, has a one to seven year payback period.
  "The $700,000 comes into play because you can have a $700,000 guaranteed maximum operating loan, but then you can't get a guaranteed farm ownership loan and vice versa," Porter said. "You could have $300,000 in farm ownership and $400,000 in guaranteed operating or a combination totaling $700,000, but it cannot exceed that amount at any given time. The direct operating loan programs have a $200,000 limit, but it is not contingent on the direct farm ownership program, so the two combined could total up to $400,000. To force farmers to seek financing from private lending sources, Congress placed a limit on the number of direct and guaranteed loans farmers can receive."
  Even though the SBA generally refers federal financial assistance for agricultural enterprises to the USDA, they sometimes collaborate on farm loan programs.
  Frank Quinn, SBA's assistant district director for economic development, said many farm loans are not made simply because other lenders are more qualified.
  "In the Delta, we've provided lines of credit for catfish operations, but I don't know that we've done any loans to build ponds."
  Low agricultural standards "seriously affect the eligibility of Delta farmers," he said.
  "For instance, if you're a wheat, rice, corn, soybean or cotton farmer, your annual receipts cannot exceed $500,000," Quinn said. "That pretty much rules out a farm of any size. Small farmers that fit the size standard might want to consider an SBA Low Doc Loan. Regardless of what program they are interested in, we'll be glad to try to work with any agricultural operation that meets our size standard."
  Fred Miller, president of the Bank of Anguilla and president of the Mississippi Bankers Association, said he has not used SBA programs but sometimes uses FSA programs.
  "I don't think FSA loans are as farmer friendly as they need to be and SBA underwriting has gotten so difficult that most of our farmers don't qualify," Miller said. "But right now, we're looking at every option for our farmers."