Do FSA farm loans have a lower interest rate than commercial loans?
Frequently, FSA’s direct loan rates are lower than commercial loan rates. FSA rates are based on the Government’s cost of borrowing money, which is often less than a private bank’s borrowing costs. For guaranteed farm loans (made and serviced by banks and Farm Credit System institutions), interest rates are negotiated between the lender and the farmer. FSA, however, has an Interest Assistance program for guaranteed operating loans, which provides a 4% interest rate reduction to farmers who cannot project a positive cash flow at the lender’s regular interest rate.
