Emergency Loan (EM) Assistance

1. Emergency Loan (EM) Assistance Presentation Developed by: Joe Parcell, Assistant Professor and Extension Economist, University of Missouri Source of Information: Farm Service Agency, USDA

2. What is the Em? FSA provides low-interest EM loan assistance to eligible farmers to help cover production and physical losses in counties declared as disaster areas by the President or designated by the Secretary of Agriculture. The FSA Administrator may also authorize EM loan assistance to cover physical losses only.

3. EM - Eligibility Emergency loans are available to qualifying ranchers and farmers who: • Are established operators of family farms; • Are citizens or permanent residents of the United States; • Have adequate training or experience in managing and operating afarm or ranch necessary to assure reasonable prospects of success; • Have suffered a qualifying physical loss, or a production loss of atleast 30 percent in any essential farm or ranch enterprise; • Cannot obtain commercial credit; • Can provide collateral to secure an EM loan; and • Can demonstrate that they have repayment ability.

4. What Can I Use EM Loans For? Emergency loan funds may be used to: • Restore or replace essential physical property, such as animals, fences, equipment, orchard trees, etc. • Pay all or part of production costs associated with the disaster year; • Pay essential family living expenses; • Reorganize the farming operation; and • Refinance debts.

5. When Is EM Assistance Available? For EM loan assistance to become available, the county in which the damage occurred must be designated as a disaster area, or be contiguous to a county that is designated. Depending on the nature of the disaster, assistance may be made available under the following kinds of designations: • Presidential Disaster Declarations • Secretarial Disaster Designations • Physical Loss Designations

6. What Requirements Must I Meet? FSA loan requirements are different from those of other lenders. Some of the more significant of these conditions are: • Borrowers must keep acceptable farm records; • Borrowers must operate in accordance with a farm plan they develop and agree to with FSA; • Borrowers may be required to participate in a financial management training program, and may be required to obtain crop insurance.

7. How Much Can I Borrow? The loan limit is up to 80 percent of actual production loss (i.e., the value of lost crops, milk etc.), or 100 percent of the actual physical loss, with a maximum indebtedness under this program of $500,000.

8. What Are the Terms of an EM Loan? • Loans for crop, livestock, and non-real-estate losses are normally repaid in 1 to 7 years depending upon the loan purpose, repayment ability, and collateral available as loan security. • In special circumstances, terms of up to 20 years may be authorized. • Loans for physical losses to real estate must normally be repaid within 30 years. In unusual circumstances, repayment may be extended over a maximum of 40 years. • EM loan borrowers are expected to return to conventional credit sources when they are financially able. EM loans are a temporary source of credit, and FSA reviews borrowers periodically to determine whether they can return or "graduate" to commercial credit.

9. What Is the Interest Rate? The EM annual interest rate is set by the Secretary of Agriculture. The current interest rate is 3.75 percent

10. Security Requirements All EM loans must be fully collateralized. A first lien is required on all property or products acquired, produced, or refinanced with loan funds. The specific type of collateral required may vary depending upon the loan purpose, repayment ability, and the individual circumstances of the applicant.