The US Department of Agriculture is changing how its farm loans are processed so that producers get money faster and with less paperwork. The Farm Service Agency (FSA), which lends directly and guarantees loans by banks and credit unions for farmers who cannot get reasonable commercial credit, has announced four sets of reforms.

The Application Fast Track programme, piloted to move qualified low-risk borrowers through approval more quickly on the strength of their financial information and repayment history, becomes permanent after shorter processing times were reported nationwide. FSA is also simplifying how collateral is reviewed on direct loans to speed up closings.

On the guaranteed side, institutions in the Preferred Lender Program, which have a strong record in agricultural lending, gain more authority to verify a borrower's financial strength, creditworthiness and collateral without the same level of agency review, which should cut approval times.

"One of the biggest challenges farmers and ranchers face is access to capital," said Under Secretary Richard Fordyce. "We've seen historic demand for farm loans over the last two years, demonstrating the importance of accessible, affordable credit for America's farmers and ranchers."

The fourth change is digital. The first phase of a modernisation effort lets lenders submit guaranteed-loan applications, supporting records and documents electronically instead of on paper, although paper will still be accepted; USDA plans to extend the lessons to other loan programmes later.

Photo: USDA

Source: Farms.com