August 13, 2002

A total of $98.2 million will be transferred from USDA's guaranteed operating loan program to its direct operating loan program to help meet the needs of farmers and ranchers. The funding transfer will particularly help minority and small farmers, who receive direct operating loans through USDA programs.

Each year, approximately 14,000 minority, beginning and other farmers and ranchers receive direct operating loans from FSA. By law, the Secretary has the authority to move appropriated funds between these loan programs to meet the needs of family farmers and ranchers. Direct loans are provided directly from USDA's Farm Services Agency to the borrower. Farmers and ranchers must meet certain eligibility and other regulatory requirements.

Farmers and ranchers can use the low-interest direct operating loans to purchase livestock, equipment and feed; engage in conservation measures and refinance indebtedness. Under the guaranteed loan program, FSA guarantees loans made by conventional agricultural lenders for up to 95 %of the principal loan amount. The lender is responsible for servicing the borrower's account for the life of the loan. The transfer of funds will not impact the availability of funds for the guaranteed operating loan program.

For more information on the direct and guaranteed loans programs, farmers and ranchers should contact or visit their local FSA offices.