Emergency Farm Loans
Another important type of loan provided by the USDA’s farm service agency is the emergency farm loan. The sole purpose of these loans is to help producers and farmers to recover from farm losses incurred due to floods, drought, and other natural disasters or during quarantine. Using these emergency loans, farmers can either repay some of their loans or use the finances for restoration or replacement of their lost property. Apart from these, borrowers can receive temporary financial assistance through these emergency loans for the purpose of restoring farming activities, pay back the production costs associated with the disaster or pay for essential family expenses.
But there are certain eligibility guidelines that need to be fulfilled in order to avail these loans. The applicants must be permanent citizens of U.S and must have a satisfactory credit record. They must be living in the area that has been declared as disaster area by the federal government or the President. They must have considerable farming experience and must have suffered 30 percent loss in production. Apart from this, the applicants must provide proof about their repayment capability. Providing collateral is a must while issuing emergency loans. This can be in the form of physical assets such as property or can be the products acquired or produced on the farm.
These emergency farm loans are available at a fixed annual interest rate which is currently 3.75 percent. In order to be eligible for an emergency loan, the borrowers must submit their applications within eight months of the disaster. Borrowers can avail a maximum amount of $500,000 through these loans that covers almost 100 percent of the total loss. The repayment term of these loans varies with the nature of the loss incurred. Loans taken for the loss of livestock, crop and other non real estate losses must be repaid within a period of seven years. But the repayment term for the loans given for physical losses to real estate can extend up to 30 years.
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