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FSA direct loan targeting successful and financially necessary

FSA direct loan targeting successful and financially necessary The Farm Service Agency FSA direct farm loan program provides credit to familysized farms including those operated by beginning farmers and socially disadvantaged applicants. Approximately 37 of all U.S. farms are estimated to be eligible for FSA direct loans when farm size, credit needs, farming experience, and occupation are taken into account. However, market penetration rates for various borrower cohorts range from 0.8 to 4.6 for FY 2000S2003. In general, beginning farmers have weaker financial characteristics than nonbeginning farmers. Yet, the same result is not found when comparing socially disadvantaged farmers with nonsocially disadvantaged farmers, such that there are few significant differences or the differences in financial characteristics are mixed. Overall, results indicate FSA direct farm loan borrowers have weaker financial characteristics than eligible, nonFSA direct farm loan borrowers, implying FSA is serving farmers likely to be denied credit by commercial lenders. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

FSA direct loan targeting successful and financially necessary

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0002-1466
DOI
10.1108/00214660780001196
Publisher site
See Article on Publisher Site

Abstract

The Farm Service Agency FSA direct farm loan program provides credit to familysized farms including those operated by beginning farmers and socially disadvantaged applicants. Approximately 37 of all U.S. farms are estimated to be eligible for FSA direct loans when farm size, credit needs, farming experience, and occupation are taken into account. However, market penetration rates for various borrower cohorts range from 0.8 to 4.6 for FY 2000S2003. In general, beginning farmers have weaker financial characteristics than nonbeginning farmers. Yet, the same result is not found when comparing socially disadvantaged farmers with nonsocially disadvantaged farmers, such that there are few significant differences or the differences in financial characteristics are mixed. Overall, results indicate FSA direct farm loan borrowers have weaker financial characteristics than eligible, nonFSA direct farm loan borrowers, implying FSA is serving farmers likely to be denied credit by commercial lenders.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: May 5, 2007

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