John Smythe, state executive director of USDA’s Farm Service Agency (FSA) in California announced that effective Oct. 1, 2008, the maximum loan limit for FSA’s guaranteed loan program will be $1,094,000. The previous loan limit was $949,000.

Earlier, it was announced that the new farm bill also raised FSA’s direct loan limit to $300,000, up from the prior $200,000 limit. These increased guaranteed and direct loan limits reflect the rising input costs affecting farmers and ranchers.

"In these difficult financial times, our state’s lenders and borrowers will appreciate these higher Guaranteed Loan program lending limits. It responds to the increasing credit needs of the state's farmers and ranchers," said Smythe. “In the same way, our direct loan program’s higher loan ceiling raises capital usage options for producers who obtain their loans directly from us.”

FSA's guarantee loan programs allow lenders to offer agricultural credit to farmers who do not meet the lender's normal underwriting criteria. FSA provides loans programs for beginning farmers and limited resource producers, and provides lenders such as banks, Farm Credit System offices and credit unions with a guarantee to cover up to 95 percent of the loss if a loan goes into default.

There are two types of guaranteed and direct loans: Farm Ownership (FO) and Operating (OL). FO Loans may be made to purchase farmland, construct or repair buildings and other fixtures, develop farmland to promote soil and water conservation, or to refinance debt.

OL Loans may be used to purchase livestock, farm equipment, feed, seed, fuel, farm chemicals, insurance, and other operating expenses. Operating Loans can also be used to pay for minor improvements to buildings, costs associated with land and water development, family living expenses, and to refinance debts under certain conditions.

Farmers and ranchers interested in FSA guaranteed loan programs may contact their lender or their local USDA Service Center or FSA office for more information. To find your nearest FSA office you can visit www.fsa.usda.gov/ca or call 530-792-5520.