FSA Direct and Guaranteed Loan Programs
FSA Direct and Guaranteed Loan Programs — The FSA guaranteed loan program has proven to be cost effective in reducing federal budget outlays. However, some rural areas have a shortage of commercial lending institutions that are interested in production agricultural lending. In such areas, the FSA Loan Guarantee program is of little value and leaves many producers dependent on FSA direct loans to finance their operations. NASDA urges continuation of and adequate funding for FSA direct loan programs. In keeping with the mission of FSA lending, NASDA also urges that FSA guaranteed loan limits remain capped at reasonable levels.
Under FSA Instruction 1951-S, required loan servicing actions are offered to producers who become delinquent on FSA direct loans. FSA guaranteed loans provide a substantial safety net for commercial lenders and even though 1951-S loan servicing is available to guaranteed lenders, they are not required to utilize the servicing options before loan liquidation. NASDA recommends an incentive, such as a higher percentage guarantee, be offered to commercial lenders who agree to service delinquent guaranteed loans according to 1951-S.