United States Department of Agriculture
Farm Service Agency
Supporting Statement
OMB Control Number 0560-0237
7 CFR 764, Direct Loan Making
05/07/2019
FSA is requesting a revision and extend the currently approved information collection request. Several changes are being made in the estimates for the burden hours and the number of respondents in an increase in the use of the existing forms.
Explain the circumstances that make the collection of information necessary.
FLP provides loans to family farmers to purchase real estate and equipment and finance agricultural production. The regulation covered by this information collection package describes the policies and procedures the agency uses to provide supervised credit to FLP applicants requesting direct loan assistance in accordance with the provisions of the Consolidated Farm and Rural Development Act (CONTACT) (7 U.S.C. 1921 and Pub. L. 87-128), as amended. Direct loan making information collection requirements include financial and production records of the operation, as well as information necessary to obtain liens on collateral, provide evidence of the indebtedness, and ensure repayment of the loan. Additionally, the Direct Farm Ownership Microloan (DFOML) was already included in this collection which taken into account the number of regular FO application was normally received for loan requests of $50,000 or less. The hours for the Land Contract Guarantee Program and Emergency Equine Loss Loan Program were already merged into the Direct Loan Making total burden hours. Also, the Farm Storage Facility Loan Program was exempted, and those numbers are shown in column 12 of the FSA-85-1- Reporting and Recordkeeping Requirements, under Exempt.
Authority to establish the regulatory requirements contained in 7 CFR 764 is provided under 5 U.S.C. 301, which provides that “The Head of an Executive department or military department may prescribe regulations for the government of his department … the distribution and performance of its business. Furthermore, section 339 of the CONTACT Act (7 U.S.C. 1989) provides that “the Secretary is authorized to make such rules and regulations, prescribe the terms and conditions for making… loans, security instruments and agreements, except as otherwise specified herein, and to make such delegations of authority as he deems necessary to carry out the title.” The Secretary delegated authority to administer the provisions of the Act applicable to FLP to the Under Secretary for Farm and Foreign Agricultural Services (FFAS) in section 2.16 of 7 CFR part 2. FFAS further delegated this authority to the FSA Administrator in section 2.42 of 7 CFR part 2.
Indicate how, by whom, and for what purpose the information is to be used. Except for new collection, indicate the actual use the Agency has made of the information received from the current collection.
Information is submitted by applicants to the local agency office serving the county in which their business is headquartered. The information is necessary to thoroughly evaluate the applicant’s request for a direct loan and is used by agency officials to:
Ensure that cash flow projections used in determining loan repayment are based on the actual production history of the operation.
Ensure that a loan is adequately secured.
Ensure the applicant meets the statutorily established program eligibility requirements.
Obtain assignments on income or sales proceeds, when appropriate, to ensure timely repayment of the loan.
The general nature of a loan from the agency is very similar to that of any commercial creditor. However, agency applicants tend to pose a higher economic risk of loss than those operations financed by commercial creditors as applicants must document that no other source of credit is available at the time of application. Legislation requires the agency to actively supervise these applicants and provide credit counseling, management advice, and financial guidance. Thus, the monitoring, reporting, evaluation, and consent requirements of this supervision increase the information collection burden on agency applicants above those imposed by commercial creditors.
The information collection requirements established in 7 CFR 764 are described below and on the attached form FSA-85-1, Reporting and Recordkeeping Requirements.
FSA uses FSA-2001 as its application form for both direct loan making and direct loan servicing requests. Information collected on FSA-2001 includes name, address, type of operation, marital status, race and ethnicity, citizenship, name and address of employer, as well as certifications pertaining to delinquent Federal debt, prior convictions for controlled substances, disqualification due to Federal crop insurance fraud, restrictions and disclosure of lobbying activities, and previous debt forgiveness by the agency. The information is used to:
Ensure applicants requesting loan assistance or servicing meet statutory eligibility requirements.
Determine if the applicant qualifies for funds targeted to socially disadvantaged applicants according to the Act’s provisions.
Determine the State where the agency must file the financing statements according to the Uniform Commercial Code requirements.
FSA-2001 requires all entity members to provide information about percent of ownership in the entity, citizenship, marital status, ethnicity, race, gender, name and address of employer, as well as read the certifications provided above and sign the form.
Further, applicants must provide description of the operation on the application form instead of providing it separately. Individuals complete Parts A, B, D and E of FSA-2001. In addition to the parts that individuals complete, married respondents will also complete items 5A-5P in Part C. Entity members will complete Parts A, C, D and E. Therefore, the agency estimates it will take 30 minutes for individuals to complete the revised form and one hour for entities, as all entity members are required to provide information applicable to individuals and certify and acknowledge that they have read the certifications included on the form.
FSA estimates that there will be 19,620 (see total annual responses (item 10 in FSA-85-1) individual/married responses from 26,125 applicants (included 125 electronic submissions) and 2,395 entity responses (see total annual responses (item 10 in FSA-85-1) from 7,429 entity respondents.
For loan servicing purposes the agency anticipates 7,979 subordination responses from 10,785 individual/married respondents, 865 responses from 2,483 entity respondents, 692 responses from 923 individual/married transfer and assumption respondents, 84 responses from 232 entity respondents, 3,301 individual/married responses from 4,351 respondents, along with 350 entity responses (see total annual responses (item 10 in FSA-85-1), from 1,022 respondents for primary loan servicing per year. The agency also estimates 62 individual/married responses from 82 applicants and 6 entities from 18 entity members for shared appreciation requests.
7 CFR 764.51(b)(4); 7 CFR 766.102(a)(3); and 7 CFR 1436.4
FSA uses FSA-2002 to provide applicants and borrowers a standardized option for submitting the required financial history to the agency. FSA requires applicants to submit the last three years income and expense records as part of a complete application. This information is necessary to ensure that the projected cash flow used to determine loan repayment is based on the actual financial history of the operation.
FSA receives 9,545 applications per year from new applicants who will provide FSA-2002 as part of a complete application and it will take each one hour to complete as they will provide information for all three years or the time they have been farming, if less than three years. Applicants with outstanding loans have provided financial history to the agency as part of the previous year’s complete application or as part of the year-end analysis process, and are therefore required to provide FSA-2002 covering only the current year. FSA estimates that 4,896 applicants are required to provide FSA-2002 for the current year and it takes 30 minutes to complete it.
Lastly, borrowers requesting primary loan servicing under 7 CFR 766 are required to provide FSA-2002. As is the case for applicants with outstanding loans, most borrowers have provided the agency FSA-2002 as part of the year-end analysis and therefore, will only have to provide one year of information. FSA estimates that 1,254 borrowers will provide a complete application for primary loan servicing and the time to complete FSA-2002 for this purpose is estimated to be 30 minutes per response.
7 CFR 761.104(c)(3); 7 CFR 764.51(b)(5); 7 CFR 766.102(a)(4); and 7 CFR 1436.4
FSA uses FSA-2003 to provide applicants and borrowers a standardized option for submitting the required production history to the agency. FSA requires applicants to submit the last three years of production records as part of a complete application for loan making requests. The production records are used to ensure that the projected cash flow used to determine loan repayment is based on the actual production history of the operation.
FSA receives 9,601 applications per year from new applicants who are required to complete all three years of production information. FSA estimates that it will take one hour for each applicant to complete FSA-2003 as they will provide information for all three years or the time they have been farming, if less than three years. Applicants with outstanding loans have provided production history to the agency as part of the previous year’s complete
application or as part of the year-end analysis process, and are therefore required to provide FSA-2003 covering only the current year. FSA estimates that 4,896 applicants will provide FSA-2003 for the current year only, and it will take 30 minutes to complete.
Lastly, borrowers requesting primary loan servicing under 7 CFR 766 are required to provide FSA-2003. As is the case for applicants with outstanding loans, most borrowers have provided the agency FSA-2003 for another purpose, such as year-end analysis or loan request, and therefore, will only have to provide one year of information. FSA estimates that 1,242 borrowers will provide a complete application for primary loan servicing and the time to complete FSA-2003 for this purpose is estimated to be 30 minutes per response.
7 CFR 764.51(b)(8); 7 CFR 764.51(b)(12); 7 CFR 765.205(a)(6); 7 CFR 765.404(b)(1); 7 CFR 766.102(a)(6) & (8); 7 CFR 766.204(a)(2); 7 CFR 1436.4; and 7 CFR 1956.56
Applicants and borrowers must provide the agency access to employment and non-farm income information as well as allow the agency to verify debts with other creditors. FSA uses FSA-2004 for applicants and borrowers authorizing the agency to obtain the information needed.
Applicants and borrowers complete only one FSA-2004 and the agency makes copies and provides FSA-2004 to creditors and employers. FSA receives 19,622 requests for loan making (includes all type of loans the agency makes), 8,653 requests for subordinations, 783 requests for assumption of debt, 3,560 requests for primary loan servicing; 22 requests for homestead protection, 68 requests for amortization of shared appreciation, and 2,652 debt settlement requests. FSA estimates that each FSA-2004 will take 10 minutes to complete.
FSA-2005 – Creditor List
7 CFR 764.51(b)(12); 7 CFR 764.51(d)(2); 7 CFR 764.101(d); 7 CFR 765.205(a)(6); 7 CFR 765.404(b)(1); 7 CFR 766.102(a); 7 CFR 766.151(a)(3); and 7 CFR 766.204(a)(2)
FSA uses FSA-2005 in which applicants and borrowers provide a complete list of their creditors. The agency will use the information provided to complete, in part, the form on which creditors will verify the applicants and borrowers’ debt and assets.
FSA receives 19,622 requests for loan making (includes all type of loans the agency makes), 8,652 requests for subordinations, 705 requests for assumption of debt, 3,546 requests for primary loan servicing; 22 requests for homestead protection, and 68 requests for amortization of shared appreciation. FSA estimates that it takes 20 minutes to complete FSA-2005.
FSA-2006 – Property Owned and Leased
7 CFR 764.51(b)(9); 7 CFR 764.402(c); 7 CFR 765.205(a)(5); 7 CFR 766.102(a)(7); and 7 CFR 766.204(a)
Applicants must provide information on all land owned, to be owned or leased as well as a list of equipment and livestock to be purchased, is currently leased, or is to be leased. Borrowers requesting a subordination of the agency’s lien as well as borrowers applying for primary loan servicing have to provide that information also. Information collected on FSA-2006 includes the name of the owner of record, brief description of the land and the acreage of the land under lease, the county the land is located in, as well as the terms of the lease. The information is used to determine if FSA-2028 reflects accurately the property the applicant or borrower owns and leases.
FSA estimates that 32,547 FSA-2006 will be completed annually (20,269 for loan making, 8,658 for subordination, 3,546 for primary loan servicing, and 74 for shared appreciation), and the time to complete each is estimated to be 30 minutes.
FSA-2007- COSIGNER APPLICATION AND AGREEMENT-Revised
7 CFR 764.402 (a)(4)
If the applicant cannot meet the repayment requirements for the loan requested, or the security offered by the applicant does not meet the FSA’s requirements, FSA may accept a cosigner to ensure timely loan repayment, or a pledge of security by a third party to meet the security requirements. The cosigner only completes the FSA-2007-Cosigner Application and Agreement.
FSA estimates that 920 cosigners or third party pledges will complete FSA-2007 and it will take 15 minutes for each.
FSA-2014 – Verification of Income
7 CFR 764.51(b)(8); 7 CFR 765.205(a)(4); 7 CFR 765.404(b)(1); 7 CFR 766.102(a)(6); 7 CFR 766.152; and 7 CFR 766.204(a)(2)
Applicants requesting a direct loan and borrowers requesting subordination, primary loan servicing, homestead protection, or shared appreciation amortization, must provide FSA-2004 authorizing the agency to obtain verification of their non-farm income and other benefits the applicant or borrower may be receiving or entitled to receive, based on state law. The applicant or borrower provides employer information or other benefit provider on FSA-2001. The agency partially completes FSA-2014 and sends it to the employer or appropriate agency to verify the applicant or borrower’s non-farm income.
FSA uses the non-farm income information to determine the applicant or borrower’s repayment ability or other sources of income when considering the request. FSA estimates that verification of non-farm income or benefits will be required in the following cases per year:
19,589 respondents for loan making purposes
6,724 respondents for subordination purposes
164 respondents for transfer and assumption
2,759 for primary loan servicing purposes
19 for homestead protection
51 for shared appreciation amortization
and employers or other benefit providers will spend an average of 15 minutes completing FSA-2014.
FSA-2015 - Verification of Debts and Assets
7 CFR 764.51(b)(12); 7 CFR 764.51(d)(2); 7 CFR 765.205(a)(6); 7 CFR 765.404(b)(1); 7 CFR 766.102(a)(8); 7 CFR 766.204(a)(2); 7 CFR 1436(a)(1); and 7 CFR 1956.56
As part of a complete application for a direct loan, subordination request, transfer and assumption request, primary loan servicing, shared appreciation amortization, voluntary conveyance, debt settlement, or storage facility loan, applicants must authorize FSA to verify the applicants’ assets and debts, as well as the collateral securing such debts. Applicants and borrowers complete FSA-2004 that authorizes FSA to request financial information about the applicant from creditors and financial institutions. Further, applicants provide a list of creditors on FSA-2005. FSA completes FSA-2015 partially and provides it to creditors and financial institutions, along with a copy of FSA-2004.
Information collected from creditors on FSA-2015 is essential in evaluating the applicant or borrower’s repayment ability by ensuring that all debt repayment has been accurately reflected on the farm operating plan. Further, it provides information about the applicant or borrower’s assets invested with financial institutions. Information collected on FSA-2015 includes details regarding the security held by the creditor as well as the unpaid debt, installment amount, and repayment history. Use of the form for debt verification is not necessary when all needed information can be obtained from a credit report; however, credit reports do not provide information regarding the type and amount of security taken by the creditor. Lastly, if the applicant or borrower does not have assets invested with financial institutions and the debts can be verified through other means, the form is not completed.
FSA estimates:
4,225 creditors/financial institutions will complete an average of 3 FSA-2015 for debt settlement
2,800 creditors/financial institutions will complete an average of 3 FSA-2015 for farm storage facility loan purposes.
34,501 creditors/financial institutions will complete an average of 3 FSA-2015 for OL & EM purposes
4,332 creditors/financial institutions will complete an average of 3 FSA-2015 for FO loan making requests
435 creditors will complete an average of 3 FSA-2015 for youth loan purposes
13,898 creditors/financial institutions will complete an average of 3 FSA-2015 for subordination requests
298 creditors/financial institutions will complete an average of 3 FSA-2015 for transfer & assumption
5,355 creditors/financial institutions will complete an average of 3 FSA-2015 for primary loan servicing purposes
107 creditors/financial institutions will complete an average of 3 FSA-2015 for SA amortization
30 creditors/financial institutions will complete an average of 3 FSA-2015 for voluntary conveyance
FSA estimates that for all the above purposes FSA-2015 will take 20 minutes to be completed by either creditors or financial institutions.
FSA-2026 – Promissory Note
7 CFR 764.402(a)(1),(a)(2),(a)(4); 7 CFR 766.106; 7 CFR 766.155(c); and 7 CFR 766.204
When the agency approves a new loan or the restructuring of an existing loan, the applicant or borrower must sign FSA-2026, which serves as evidence of the indebtedness. FSA-2026 is used to establish the amount, term, interest rate charged on the loan, and repayment schedule. In addition, FSA-2026 contains loan terms and conditions such as the statutorily mandated requirement that the borrower graduate to commercial credit when reasonable rates and terms are available. Further, based on state law, FSA-2026 may contain additional state applicable provisions. Lastly, when FSA restructures a loan and a deferral is part of restructuring, the borrower signs an addendum to the promissory note acknowledging that interest accrued on the deferred principal will be paid in equal installments after the deferral term. Under all circumstances, FSA completes FSA-2026 and the applicant or borrower reviews the terms and conditions and signs it.
In the case of an individual applicant, only one signature is required; however, in the case of an entity, the entity’s officers as well as all entity members have to sign FSA-2026. FSA estimates that 23,202 individual applicants and 6,451 entity members will sign FSA-2026 for loan making purposes and 2,615 individual borrowers and 835 entity members will sign
FSA-2026 for primary loan servicing purposes.
When the applicant does not have adequate repayment ability, a third party may agree to incur liability for the debt. When this occurs, the cosigner is also required to sign FSA-2026. It is estimated that 222 cosigners will sign FSA-2026.
FSA estimates that applicants, borrowers, and cosigners will spend 20 minutes each reviewing and signing FSA-2026.
FSA-2027 – Supplemental Payment Agreement
7 CFR 764.254(b) and 7 CFR 766.109 (c)(1)
Applicants for OL loans may be required to agree to make supplemental payments on their loans when income is projected to be available. Further, borrowers receiving a deferral under
7 CFR 766, whose repayment ability increases during the deferral period, are required to make supplemental payments on their loans. FSA completes FSA-2027 based on information provided by the applicant or borrower during the loan making or servicing process. The applicant or borrower reviews the form before it is executed. FSA estimates that 656 FSA-2027 will be executed and the time is estimated to be 15 minutes.
FSA-2028 - Security Agreement
When a loan will be secured by a lien on chattels or loan servicing is requested on loans with chattel security, the applicant or borrower must execute FSA-2028. The applicant or borrower is only required to read and sign FSA-2028, as FSA completes it from information provided during the loan making or servicing process. It is estimated that 3,989 FSA-2028’s will be executed every year for youth loan purposes, 413 completed for pledge of third party, 1,209 for 150 percent requirement, 162 completed for lien on non-essential assets, 15,325 completed for OL lien on property financed, 2,377 completed for adding livestock when crops are to be fed, 4,431 for lien on new property in exchange, 133 completed for delinquent DSA lien on all assets, 343 for primary loan servicing lien on all assets, 67 completed for SA amortization lien on all assets, FSA estimates it will take 20 minutes for each applicant or borrower to read and sign FSA-2028.
FSA uses FSA-2029D or FSA-2029M to obtain a security interest in real estate it is financing with agency funds. Both forms contain uniform covenants that address borrower responsibilities such as payments towards the loan, application of payments received, taxes, assignment of proceeds from the real estate, insurance requirements, advances the agency makes on behalf of the borrower, protection of lien, hazardous substances, graduation requirements, forfeiture provisions, false statements, highly erodible land and wetland provisions, and successors and assigns, among others. Further, both forms contain non-uniform covenants such as default, death, incompetence and bankruptcy, foreclosure, and assignment of leases and rents.
Lastly, based on state law, FSA-2029D or FSA-2029M may contain additional state applicable provisions.
FSA requires that FSA-2029D or FSA-2029M, as appropriate under State law, be executed to establish the FSA’s lien against the property when a loan will be secured by real estate. When FSA makes an operating loan and the applicant does not have chattel security of up to 150 percent of the loan amount, FSA will obtain a lien on real estate. In addition, when the applicant does not have the required amount of security for the proposed loan, the agency accepts real estate pledged by a third party as security for the loan.
Borrowers requesting subordination or a partial release and will use proceeds to acquire, develop, or enlarge real estate that the agency does not have a lien on, must also execute FSA-2029D or FSA-2029M. Further, when FSA provides disaster set aside or restructures delinquent borrowers’ loans under 7 CFR 766, the borrowers are required to provide the agency with a lien on all their assets; therefore, FSA-2029D or FSA-2029M will be required under those conditions. Lastly, in loan servicing under 7 CFR 766, FSA may have to complete and require the borrower to execute a mortgage modification agreement based on specific state law requirements.
A lien on the real estate security is necessary to ensure that FSA can collect the debt from the sale of the security property should the applicant default on the loan. FSA completes FSA-2029D or FSA-2029M to provide the terms and conditions on which the loan was made; applicants, borrowers, and third parties are only required to review and sign.
In most cases, the applicant or borrower is the owner of the property. In limited cases, the property may be jointly owned by the applicant and another party, in which case both the applicant and the third party are required to execute FSA-2029D or FSA-2029M for FSA to obtain a valid lien on the property.
FSA estimates:
207 respondents will complete FSA-2029D or FSA-2029M for pledge from third party
7,712 respondents will complete FSA-2029D or FSA-2029M for 150 percent requirement
595 respondents will complete FSA-2029D or FSA-2029M for lien on nonessential assets
3,045 respondents will complete FSA-2029D or FSA-2029M for real estate (RE) financed with farm ownership (FO) funds
156 respondents will complete FSA-2029D or FSA-2029M for RE financed with beginning farmer downpayment (BFDP) funds
154 respondents will complete FSA-2029D or FSA-2029M for emergency (EM) physical loss
224 respondents will complete FSA-2029D or FSA-2029M for subordination with purchase
82 respondents will complete FSA-2029D or FSA-2029M for proceeds used for development
54 respondents will complete FSA-2029D or FSA-2029M for delinquent DSA lien on all assets
730 respondents will complete FSA-2029D or FSA-2029M for primary loan servicing lien on all assets
72 respondents will complete FSA-2029D or FSA-2029M for SA amortization lien on all assets
In addition, 973 respondents will complete mortgage modification agreements based on state law requirements, when the agency completes servicing requests under 7 CFR 765.205 and 7 CFR 766.106. The respondents will spend an average of 30 minutes on RE/mortgage and modification agreement.
FSA estimates that applicants, borrowers, and third parties when required, will spend an average of 30 minutes each reviewing and executing FSA-2029D or FSA-2029M.
FSA-2041 – Assignment of Proceeds from the Sale of Products and FSA-2042 – Consent to Payment of Proceeds from Sale of Products
7 CFR 764.402; 7 CFR 765.303; and 7 CFR 766.106(a) & (b)
At, or before loan closing or closing the servicing action requested, the agency requires all necessary signatures to obtain the required security interest in the collateral. In addition to executing a financing statement or real estate mortgage/deed of trust, as appropriate, the agency may require an assignment or consent to payment from proceeds to ensure that proceeds from the sale of security or products is submitted to the agency.
FSA-2041 is executed by applicants or borrowers to provide an assignment of proceeds from the sale of products to the agency when the agency does not have a lien on the products. FSA-2041 enables the purchaser of the products to directly submit sale proceeds to the agency. FSA-2042 is executed by applicants or borrowers to provide consent to payment of proceeds from the sale of products to the agency when the agency has a perfected lien on the products.
Information collected on both FSA-2041 and FSA-2042 includes the applicant’s name and address, the purchaser’s name and address and provides a written record of the agreement reached between the parties for the disposition of the proceeds. The agency uses the information provided on both forms to ensure the applicant has adequate repayment ability for the loan or servicing request. It is estimated that 7,062 applicants or borrowers will complete either FSA-2041 or FSA-2042, as appropriate, and each of 2,341 purchasers will complete three FSA-2041s or FSA-2042s. FSA estimates that it takes 20 minutes each applicant, as well as purchaser, to complete the required form.
FSA-2043 – Assignment of Proceeds from the Sale of Dairy Products and Release of Security Interest
7 CFR 764.402; 7 CFR 765.303; and 7 CFR 766.106(a) & (b)
Applicants may assign to the agency the proceeds from the sale of dairy products when the agency has a security interest in the products under the Uniform Commercial Code. Further, borrowers requesting regular as well as primary loan servicing, may be required to provide a revised assignment to the agency to close the servicing request. Information collected on FSA-2043 includes the products’ purchaser name and address, the applicant’s name and address as well as the agreement reached regarding the distribution of payments for dairy products sold. FSA requires this information to ensure that the applicant will be able to repay the requested loan or be able to meet the terms for the restructured loan. It is estimated that 3,345 applicants will complete one FSA-2043, and 1,105 purchasers will complete three FSA-2043s, as dairy operations and purchasers of dairy products tend to be concentrated in certain areas of the country. FSA estimates that it takes 20 minutes each applicant, as well as purchaser, to complete FSA-2043.
FSA-2044 – Assignment of Income from Real Estate Security
7 CFR 764.402; 7 CFR 765.252
Applicants and borrowers may assign to the agency income derived from a lease of real estate security when all or part of the proceeds will be collected over a period of time. FSA uses FSA-2044 to set forth the terms and conditions applicable to the assignment. It is estimated that 1,995 applicants and borrowers will execute FSA-2044 and the time it takes is estimated to be 20 minutes per response.
Section 311(b)(1) of the CONTACT Act provides authority to make loans to rural youths “to operate an enterprise in connection with their participation in 4-H Club, Future Farmers of America, and similar organizations.” FSA receives 4,410 applications per year from youth loan applicants and it takes 30 minutes for each applicant to complete FSA-2301. Information provided on FSA-2301 includes the applicant’s name, address, marital status, race and ethnicity, citizenship, as well as certifications pertaining to delinquent Federal debt, prior convictions for controlled substances, and previous debt forgiveness by the agency.
A complete application for a youth loan includes a recommendation and plan of supervision by a project advisor associated with the organization in which the youth participates. This information is needed to ensure that the youth is receiving guidance during the loan term. It is estimated that 4,410 of youth applicants have the same project advisor, as youth loans tend to be concentrated in rural areas. Therefore, 2,652 project advisors will spend an average of 10 minutes preparing and submitting their recommendation.
Lastly, the youth applicant’s parent or guardian must acknowledge the understanding of the full liability being incurred by the youth loan applicant. FSA estimates that 93.8 percent of youths have not reached the age of majority when they apply for a loan, and therefore, 4,044 parents or guardians must provide the acknowledgement to the agency. It is further estimated that each acknowledgement takes 10 minutes.
7 CFR 764.51(a)(3)
For new applicants or for OL applicants who are adding a new enterprise, a complete direct loan application includes a description of the applicant’s farm training and experience, including each entity member that will be involved in managing or operating the farm. Information provided on FSA-2302 is used to ensure that the applicant has the necessary training and experience to carry out the planned operation. It is estimated that 11,330 applicants will spend 20 minutes each completing FSA-2302.
FSA-2309 - Certification of Disaster Losses
As part of a complete application for emergency loans, applicants must complete FSA-2309. The information collected provides details regarding the losses suffered by the applicant and is used to calculate whether or not the applicant suffered a qualifying loss necessary to meet the statutorily-mandated emergency loan eligibility requirements. FSA estimates that 1,361 applicants will complete FSA-2309 annually and it will take 90 minutes to complete.
FSA-2310 –Lender’s Verification of Loan Application
7 CFR 764.352(e)
Individual applicants, as well as entity members, requesting an emergency loan must document whether they can obtain needed credit from commercial lenders. Applicants partially complete FSA-2310 to allow the lenders to whom they have applied for a loan to provide information to FSA pertaining to their request. In turn, lenders complete the remaining parts of FSA-2310, which consist of debts owed by the applicant, the lender’s willingness to continue extending credit to the applicant, and the amount, interest rate, terms, purpose and security offered by the applicant for the proposed loan. Lastly, lenders indicate if they would be willing to provide the needed credit to the applicant through an agency guaranteed loan.
FSA estimates that 1,232 individuals and 379 entity members will partially complete FSA-2310 and it will take 5 minutes to complete. Further, FSA estimates that 877 lenders will take 30 minutes to complete the remainder of FSA-2310.
When FSA approves a loan request, the applicant must read and agree to the loan approval conditions by executing FSA-2313. Information contained on FSA-2313 includes the amount of the loan, loan term, interest rate and any other conditions required for loan approval. It is estimated that FSA-2313 will be executed by 26,350 applicants. Each will spend 20 minutes reviewing and executing FSA-2313.
This form will be used by the applicant to apply for OL assistance using the Streamlined OL application process. Each applicant will provide one application form. Information collected on FSA-2314 includes name, address, types of operation, marital status, race and ethnicity, citizenship, as well as certifications pertaining to delinquent Federal debt, prior convictions for controlled substances, disqualification due to Federal crop insurance fraud, restrictions and disclosure of lobbying activities, and previous debt forgiveness by the agency. The information is used to:
Ensure applicants requesting direct loan assistance or servicing meet statutory eligibility requirements.
Determine if the applicant qualifies for funds targeted to socially disadvantaged applicants and beginning farmer applicants according to the Act’s provisions.
Determine the State where the agency must file the financing statements according to the Uniform Commercial Code requirements.
The application form requires all entity members to provide information about percent of ownership in the entity, citizenship, marital status, ethnicity, race, gender, as well as read the certifications provided above and sign the form.
Further, this form consolidates information gathering that is normally gathered on several other forms as part of our regular OL application process. Additionally, this reduces the overall net volume of pages in the entire application process.
Applicants must provide
Authorization to FSA to order a Credit Bureau Report (CBR), instead of signing for this authorization separately on the FSA 2004 (Authorization to Release Information).
FSA estimates it will take 60 minutes for individuals to complete the form and 90 minutes for entities, as all entity members are required to provide information applicable to individuals and certify and acknowledge that they have read the certifications included on the form.
FSA estimates that 5,000 Streamlined OL requests will be completed annually, individual and married applicants (100%) and < 14 entity members will apply.
FSA-2317 – Consent and Subordination
7 CFR 764.255(b)
When FSA makes an operating loan for items that will become fixtures on real estate the agency does not have a lien on, it requires the lender with the lien on the real estate to consent to the agency making the loan. FSA partially completes FSA-2317 and the applicant and lender are required to review and execute the form. It is estimated that 192 applicants and 194 lenders will be required to execute FSA-2317. For both, the response time is estimated to be 15 minutes.
FSA-2318 – Agreement for the Disposition of Jointly Owned Property
7 CFR 764.402(c)
When FSA makes a loan to purchase or refinance debt against interests in jointly-owned property, all the property owners must execute FSA-2318 to agree on the conditions under which the loan will be made. Further, the applicant, as well as all owners, provides their respective lienholder’s information and percent of undivided interest on FSA-2318. Before the jointly-owned property can be sold under an involuntary sale, all lienholders have to provide consent.
FSA estimates that less than 10 lienholders per year will have to provide consent to sell jointly-owned property. FSA estimates that 118 applicants will execute FSA-2318, and it will take 10 minutes each.
FSA-2319 – Agreement with Prior Lienholder
7 CFR 764.104(a)(2)
When FSA approves a real estate loan subject to an existing prior lien, FSA requires the prior lienholder to execute FSA-2319, if state law does not require the lienholder to provide notice of foreclosure to junior lienholders. FSA-2319 provides the prior lienholder is required to notify the agency if the borrower defaults on the prior lienholder’s loan, so the agency can protect its financial interest. The agency completes FSA-2319 and the prior lienholder reviews and executes it. It is estimated that 1,535 prior lien holders for direct loan purposes will spend 10 minutes each reviewing and executing the form.
FSA-2320 – Property Insurance Mortgage Clause
7 CFR 764.108
When real estate is security for an agency loan, the applicant has to obtain insurance as provided by the agency. FSA-2320 is used when the insurance is written by a company other than a contract company; is attached to the property insurance policy; and, provides the distribution conditions for any loss or damage payments. After the loan for which FSA-2320 was provided has been paid in full, FSA uses it to release its security interest in the real estate. FSA estimates that 12 insurance companies will provide FSA-2320 and it will take 10 minutes to complete.
7 CFR 764.51(d)(2)(i).
This form will be used by the applicant to apply for FO assistance using the ML application process. Each applicant will provide one application form. Information collected on FSA-2330 includes name, address, and type of operation, marital status, race and ethnicity, citizenship, as well as certifications pertaining to delinquent Federal debt, prior convictions for controlled substances, disqualification due to Federal crop insurance fraud, restrictions and disclosure of lobbying activities, and previous debt forgiveness by the agency. The information is used to:
Ensure applicants requesting direct loan assistance or servicing meet statutory eligibility requirements.
Determine if the applicant qualifies for funds targeted to socially disadvantaged applicants and beginning farmer applicants according to the Act’s provisions.
Determine the State where the agency must file the financing statements according to the Uniform Commercial Code requirements.
The application form requires all entity members to provide information about percent of ownership in the entity, citizenship, marital status, ethnicity, race, gender, as well as read the certifications provided above and sign the form.
Further, the form consolidates information gathering that is normally gathered on several other forms as part of our regular FO and OL application process. Though this lengthens this new application form over our regular application form, the time savings to complete the entire ML application shows a net reduction as only parts of other forms are being used for this reduced ML application process. Additionally, this consolidation of forms reduces the overall net volume of pages in the entire application process.
Applicants must provide
Shortened versions of their assets and debts, and their annual cash flow budget, instead of providing this information separately on the FSA 2037 (Balance sheet); and FSA 2038 (Income & Expense sheet), respectively;
Description of applicant’s farm training and experience instead of providing this information separately on the FSA 2303 (Description of farm Training and Experience).
Authorization to FSA to order a Credit Bureau Report (CBR), instead of signing for this authorization separately on the FSA 2004 (Authorization to Release Information).
FSA estimates it will take 90 minutes for individuals to complete the form and 120 minutes for entities, as all entity members are required to provide information applicable to individuals and certify and acknowledge that they have read the certifications included on the form.
FSA estimates that 5,593 ML requests (included 2 electronic submissions) will be completed annually, individual and married applicants (100%) and < 10 entity members will apply.
FSA-2340 – Selection of Attorney/Title Agent
FSA-2341 – Certification of Attorney
FSA-2342 – Certification of Title Insurance Company
7 CFR 764.402(d)(3) and 7 CFR 765.205(b)(13)
Applicants select the closing agent to perform loan closing and other legal services to ensure they obtain good and marketable title to the security. FSA developed FSA-2340 to document that applicants selected the agent, and that the applicant understands that the agency does not assume any liability or responsibility for the closing agent’s fees. FSA estimates that all applicants for farm ownership loans as well as for emergency loans secured by real estate and borrowers requesting subordination of real estate security, or 4,833 applicants, will complete FSA-2340. FSA estimates that each FSA-2340 will take 10 minutes to complete.
Closing agents for agency loans have to be licensed in the state where the loan will be closed; must not be debarred or suspended from participation in Federal programs; must maintain liability insurance as well as fidelity bond to cover employees with access to loan funds; have
Knowledge of the requirements of state law to close the loan; provide title clearance; and act promptly to provide the required services. FSA estimates that one third of applicants will use the same closing agent to perform loan closing; therefore, a total of 2,850 closing agents will complete FSA-2341 or FSA-2342, as appropriate, and it will take 20 minutes per response.
FSA will not close a loan secured by real estate, or approve a subordination of a real estate lien until it is certain that good and marketable title can be vested in the applicant, subject only to encumbrances, exceptions, and reservations authorized by FSA in writing, and ensure FSA can obtain a valid lien on the security. The applicant-selected closing agent prepares FSA-2344 after examination of real estate records to determine if the requested action can be closed and provide the agency with a valid lien and the applicant with good and marketable title. Information contained in FSA-2344 is used by the agency to prepare the loan closing instructions. It is estimated that 2,725 closing agents will complete 3,643 FSA-2344 and each one will take 90 minutes to complete.
7 CFR 764.402(e)
When a loan will be secured by real estate, or a subordination of real estate security is approved, FSA uses FSA-2350 to provide loan closing instructions to the closing agent. The closing agent must review the instructions, and after closing the loan, sign and return FSA-2350 certifying the loan was closed according to the instructions provided. It is estimated that 2,455 closing agents will review and complete 3,658 FSA-2350 and each will take 30 minutes.
At loan closing or subordination, the seller of the property must execute FSA-2351, providing that no work or improvements have been completed within a specified time period, or that if work was completed, all contractors have been paid. The specified time period is established based on state laws pertaining to the filing of mechanics liens. The certification is necessary to ensure that mechanics liens cannot be filed after the agency loan or the subordination has been closed as mechanics liens take priority, and would, thereby, adversely impact the agency’s interest in the security property. It is estimated that 491 sellers will spend an average of 10 minutes each reviewing and executing FSA-2351 at loan closing.
FSA will not close a loan secured by real estate, or approve a subordination of a real estate lien until the closing agent can issue a policy of title or final title opinion showing title vested as required, the agency lien and security position and any exceptions. This information is necessary to ensure the agency can obtain the desired lien position and that there are no flaws or encumbrances on the title that would adversely impact the agency’s financial interest in the security property. FSA-2352 is prepared by the closing agent to provide the final title opinion. It is estimated that 2,445 closing agents will complete 3,643 FSA-2352 and each will take 30 minutes to complete.
FSA-2360 – Report of Lien Search
7 CFR 764.402(c)
For loans that will be secured by chattels, the agency requires that a lien search be completed to ensure the agency will obtain the required lien priority. In most cases, FSA employees complete the lien search; however, attorneys may be used to conduct the lien search. FSA estimates that 607 attorneys for direct loan purposes and will each complete one FSA-2360 and it will take 30 minutes to complete it.
FSA-2361 – Subordination to the Government
7 CFR 764.255(b)
FSA requires a first lien on all property or products acquired or produced with OL loan funds. If another creditor holds the first lien position, FSA may require the creditor to subordinate its security position to the agency to close the loan. FSA estimates that 545 creditors will complete and execute FSA-2361 and it will take 30 minutes for each.
The applicant must submit evidence of successful completion of financial or production courses, or evidence which demonstrates to the agency’s satisfaction the applicant’s experience and training necessary for a successful and efficient operation to request waiver of borrower training requirements. FSA requires borrower training at the time of initial loan; when supervision as provided under 7 CFR 761 indicates need for training; or, when the applicant is requesting a loan for a new enterprise. Applicants for initial loan only may request waiver of borrower training.
Applicants requesting an initial loan from the agency complete FSA-2370 and provide appropriate documentation needed for the agency to determine training needs. FSA estimates that there are 9,323 applicants, and one third will request waiver of borrower training. It is estimated that the applicants will spend 30 minutes each completing FSA-2370 and submitting the documentation required.
FSA-2371 – Agreement to Complete Borrower Training
7 CFR 764.452(b), (c), and (d); 7 CFR 764.454
When FSA determines, based on the evaluation of the applicant’s documentation of training and experience, the applicant will benefit by attending borrower training, the agency requires applicants to execute FSA-2371 agreeing to complete financial management, production, or both training, as appropriate. Further, FSA may require applicants for a loan to add a new enterprise to attend borrower training, even if the training requirement had been waived or completed under previous loan requests. Lastly, if agency supervision indicates the applicant needs to attend borrower training, FSA will require the applicant to complete the appropriate courses. All applicants executing FSA-2371 must complete the training within 2 years. It is estimated that 8,306 applicants will each spend 15 minutes reviewing and executing FSA-2371.
After FSA approves a vendor’s request to become approved borrower training source for FSA’s applicants, the vendor and FSA executes FSA-2375. The agreement to conduct borrower training is valid for three years and outlines the terms agreed to by the vendor and the agency, based on the documentation provided on the vendor’s application. It is estimated that 145 vendors will spend 10 minutes each reviewing and executing the form.
Upon completion of a required borrower training course, the borrower completes an evaluation of the course using FSA-2376. The borrower submits the completed form to the vendor for submission to the agency. This evaluation is used by the agency to ensure that the training course is meeting the planned objective and that the vendor is fulfilling the requirements established in their agreement with FSA. It is estimated that 3972 borrowers will each spend 15 minutes completing the evaluation. Further, it is estimated that 356 vendors will spend 30 minutes each reviewing and returning 10.39 forms FSA-2376 to the agency.
Entities applying for agency loans must provide copy of the entity’s charter, articles of incorporation and bylaws, evidence of current registration and a resolution adopted by the Board of Directors or entity members authorizing the entity to apply for and obtain the loan. Only new entities that have not obtained a loan from the agency are required to provide this information.
FSA estimates this number to be < 10 each year and it takes 15 minutes for each entity to provide copies of the above documents.
A statutory eligibility requirement that must be met by applicants is that other credit at reasonable rates and terms, including a loan guaranteed by the agency, is not available. Applicants, including individual entity members, must submit documentation that other credit is not available.
To obtain this documentation, the applicant must contact local agricultural lenders. It is estimated that 5,946 lenders will meet with an average of 3.14 applicants for an average of one hour to provide the documentation required.
7 CFR 764.51(b)(10) – Copy of Legal Description of Property to be Purchased, Leases, or Other Agreements
As part of a complete application, the applicant must submit a copy of the legal description of the property to be purchased, leases for rented land or other agreements that are needed to effectively evaluate the loan request. For example, a copy of the lease is needed if the applicant is requesting a loan to finance improvements to leased land to ensure the term of the lease exceeds the proposed loan term. The legal description of the property to be purchased is needed for the agency to obtain the appraisal and file the security instrument. It is estimated that 13,560 applicants will spend 15 minutes each submitting copies of this information.
7 CFR 764.51(b)(13) – Additional Information Needed to Evaluate Loan Application
FSA may request any additional information needed to effectively evaluate the loan application, as it is impossible to list all potential information that would be needed from each and every applicant. In most cases, this will be limited to providing FSA with a copy of documents already in the applicant’s possession, such as a divorce decree, information pertaining to child support or alimony paid or received, or copy of driver’s license or other documents that may be required under State law.
Collection of information under this requirement will be limited to only those items that potentially impact the applicant’s cash flow projections or are needed to ensure the agency obtains a legally enforceable lien on the proposed loan security. Several states have developed their own forms to ensure an enforceable lien on loan security required by State law. Colorado has developed form FSA-2300-2 CO, Transfer and Assignment of Waterstock, for obtaining the required information. Kansas has developed form FSA-2300-8 KS, Authorization to Amend an Existing Financing Statement, for obtaining the required information. Minnesota has developed form FSA-2000-1 MN, Affidavit of Ownership, for obtaining the required information. Oregon has developed form FSA-2300-3 OR, Contract Modification, for obtaining the required information. Wisconsin has developed form FSA-2300-1 WI, Agreement by Holder of Seller’s Interest under Land Contract, for obtaining the required information. Wisconsin has developed form FSA-2300-4 WI, Mortgage for Wisconsin by a Third Party, for obtaining the required information. Wisconsin has developed form FSA-2300-5 WI, Security Agreement by a Third Party, for obtaining the required information. The respondents who complete the respective state forms are not required to provide any other additional information for this purpose. It is estimated that 1,255 applicants will spend 15 minutes each providing copies of the appropriate documentation to the agency.
Historically, direct OL and FO loan funds are exhausted each fiscal year before all approved loans are funded. When loan funds are exhausted, the agency will keep an approved loan application on file until funding becomes available. FSA, however, will contact the applicant at least annually to determine if the application should be retained or withdrawn. It is estimated that 28 applicants per year will respond to the agency’s inquiry and it will take 10 minutes for each response.
7 CFR 764.101(c) – Citizenship Status Documentation
Applicants certify as to their citizenship status on FSA-2001, or FSA-2301 for youth loan applicants. Sections 302, 311, and 321 of the Act provide that applicants for agency loans must be United States citizens. Further, provisions of the Personal Responsibility and Work Opportunity Act of 1996 (8 U.S.C. 1611) require that recipients of Federal benefits be U.S. citizens, U.S. non-citizen nationals, or qualified aliens. Applicants who identify themselves as non-citizen nationals or qualified aliens must submit copies of supporting documentation to establish their eligibility. It is estimated that 22 applicants will spend 15 minutes each submitting copies of the required documentation to the agency.
7 CFR 764.104(b)(2) – Contract for sale – agreement to use insurance proceeds
If the real estate offered as security is held under a recorded purchase contract, the applicant and the purchase contract holder must agree in writing that any insurance proceeds received for real estate losses will be used only for one or more of the following purposes: to replace or repair the damaged real estate improvements which are essential to the farming operation; to make other essential real estate improvements; or to pay any prior real estate lien, including the purchase contract. Applicants do not normally enter into contract for sale; therefore, the agency estimates that 19 applicants and sellers will enter into contract for sale. Further it is estimated that it will take each applicant 15 minutes to provide a copy of the contract.
764.104(b)(5) – Purchase contract holder agreement
The purchase contract holder must agree in writing to not sell or voluntarily transfer their interest without prior written consent of the agency; not encumber or cause any liens to be levied against the property; not take any action to accelerate, forfeit, or foreclose the applicant’s interest in the security property; consent to the agency making the loan and taking a security interest in the applicant’s interest under the purchase contract; not take any action to foreclose or forfeit the interest of the applicant under the purchase contract because the agency has acquired the
applicant’s interest by foreclosure or voluntary conveyance, or because the agency has subsequently sold or assigned the applicant’s interest to a third party who will assume the
applicant’s obligations under the purchase contract; notify the agency in writing of any breach by the applicant; and give the agency the option to rectify the conditions that amount to a breach.
As provided above, FSA estimates that 19 contracts for sale will be executed, and it is further estimated that it will take 15 minutes to provide a copy of the contract to FSA.
764.104(c) – Request to BIA for title status report
When real estate offered as security for an agency loan is on Indian Trust lands, the applicant must request BIA to furnish Title Status Reports to the agency and approve the lien before the agency may close the loan. FSA estimates that 12 applicants will be required to comply with this requirement and it will take one half hour to fulfill.
Prior to loan closing, the applicant must provide copies of property or hazard insurance, flood insurance, or crop insurance policies, as appropriate, covering loan security, as loss or damage to the security property would jeopardize repayment of the loan and adversely impact the agency’s financial interest. Copy of the applicable insurance policy is necessary to ensure the agency is listed as loss payee or beneficiary on the insurance policy.
It is estimated that:
12,454* applicants will submit a copy of property or hazard insurance policy
11,500* applicants will submit a copy of flood insurance policy
15,150 applicants will submit a copy of crop insurance policy.
For DFOML, it is estimated that:
195* applicants will submit a copy of property or hazard insurance policy
177* applicants will submit a copy of flood insurance policy
Note: * FSA estimates that applicants may have to provide copies of one, two, or all three types of insurance, based on the loan requested and the security offered.
Further, FSA estimates it will take 15 minutes to provide the appropriate copy.
Section 371 of the CONTACT act provides that as a condition for obtaining a direct OL loan, the applicant must obtain crop insurance, if available. Further, Section 193 of the Federal Agriculture Improvement and Reform Act of 1996 provides, in part, to be eligible for assistance under section 371 of the Act, the applicant must obtain crop insurance or waive any eligibility for crop loss assistance. It is estimated that 545 applicants will spend 15 minutes providing a copy of the statutorily mandated waiver in lieu of obtaining crop insurance.
7 CFR 764.151(e) – Evidence applicable to refinance bridge FO loan
One eligible use of FO loan funds is to refinance a bridge loan made by a commercial or cooperative lender, after the agency approved the FO loan for the applicant but agency funding was not available to consummate the transaction. FSA estimates that 104 applicants will spend 15 minutes each providing a copy of the commercial lender’s promissory note, once agency funding becomes available.
7 CFR 764.255 Security Requirements for OL loans
EM loan funds may be used to repair or replace property damaged or destroyed as a result of a disaster, provided that at the time of the disaster the applicant is the owner and operator of the farm, or the operator of the farm with a lease term that exceeds the term of the loan requested. Applicants leasing the farm they operate must provide a copy of the lease to the agency to determine that the lease exceeds the proposed loan’s term. Further, the applicant is required to provide prior notification to the agency if the lease is proposed to terminate during the term of the loan. This notification is necessary to ensure that the agency’s financial interests are protected.
FSA estimates that 12 EM applicants lease the property they operate and will, therefore, have to provide a copy of the lease. The time to provide the copy of the lease is estimated to be 15 minutes. FSA estimates that less than one third of the above applicants will have to notify the agency of the lease’s termination during the loan term, and the time to provide it is estimated to be 15 minutes. FSA estimates <10 EM applicants on notification of lease’s expiration.
7 CFR 764.352(e) – Written Declination of Credit for Emergency Loan Applicants
Provisions of the CONTACT mandate that an applicant for an EM loan be unable to obtain the necessary credit from other sources. Applicants requesting a loan in excess of $300,000 must provide two written declinations; applicants requesting a loan less than $300,000 must submit one written declination; and, in the case of applicants requesting a loan less than $100,000, the agency may waive the requirement if it determines that it poses undue burden on the applicant. It is estimated that 83 percent of EM loan requests are for less than $100,000; therefore, 83 percent of applicants will provide either one or none written declination. 292 applicants will have to provide multiple written declinations. It will take each applicant 15 minutes to request it from a commercial lender.
In addition to the burden imposed on applicants, the commercial lender denying the applicant’s EM loan request must provide the written declination. It is estimated that 190 commercial lenders will spend one half hour each providing the written declination.
The provisions of the CONTACT act require that an applicant suffer a 30 percent loss to be eligible for an EM loan; therefore, when an EM loan is requested for physical losses to livestock, the applicant must provide written documentation of the inventory on hand immediately preceding the loss, and records of livestock product sales sufficient for FSA to determine the level of loss. The information is necessary to ensure the applicant suffered a qualifying loss as well as establish the value of the livestock and livestock products just prior to the loss. FSA estimates that 1572 applicants will provide written documentation and it will take 15 minutes to provide it.
7 CFR 764.355(c) – Documentation to Approve an EM Loan Based on Repayment Ability When Adequate Security is Not Available Because of the Disaster
Under the provisions of the CONTACT Act, FSA may approve an EM loan when adequate security is not available because of the disaster, provided there is reasonable assurance that the applicant has the ability to repay the loan and certain other conditions are met. One of the conditions requires that the applicant has had a positive net cash farm income in at least 3 of the past 5 years. All loan making applications require 3 years of production, income and expense records; therefore, this condition only imposes the collection of the additional two years of records over all other loan requests. While the general requirement has been reduced to three years of records for most applicants, the additional two years of documentation is necessary when a loan is being made without adequate security. It is estimated that 12 applicants will spend an average of 15 minutes providing copies of the additional two years of financial records.
Under most circumstances, FSA requires title clearance when a loan will be secured by real estate. Title clearance ensures that a valid lien can be obtained and that there are no encumbrances that would adversely impact the agency’s financial interest. An exception to the title clearance requirement is made for EM (Emergency Loan) loans of $25,000 or less. For these loans, the applicant may provide a certification of ownership in the form of an affidavit signed by the applicant. The relatively low loan amount limits potential losses to the agency. It is estimated that 62 emergency loan applicants will spend an average of 15 minutes providing a certificate of title.
7 CFR 764.454(a)(2) – Documentation of circumstances beyond the borrower’s control for not completing training within timeframe
When borrowers are unable to complete the required borrower training within 2 years due to circumstances beyond their control, such as when the scheduled course was cancelled or a training vendor was not approved in the borrower’s area, borrowers have to provide appropriate documentation to the agency. Documentation may include copy of the course’s cancellation notice and return of training fees. FSA estimates that 390 borrowers will provide the documentation required and it will take 15 minutes to provide it.
Vendors who desire agency approval to provide financial management or production training to agency borrowers must submit a written request and supporting documentation, which must include:
Sample course materials and a description of the training methods;
Specific training objectives for each session of the course;
A detailed course agenda;
A list of instructors and their qualifications;
The proposed locations where training will take place;
Cost per participant and minimum and maximum class size;
A description of the vendor’s experience providing training to farmers;
A description of how the needs of borrowers with physical or mental disabilities, or with limited English speaking proficiency will be met.
This information is necessary to ensure that the vendor is capable of providing the statutorily mandated training designed to assist the borrower in becoming a successful farm operator. It is estimated that 41 vendors will spend 16.5 hours preparing and submitting an application for approval each year.
FSA-approved vendors are required to have prior approval from FSA to change the curriculum, instructor, or cost for an approved course. This requirement ensures that training is provided in the manner outlined in the vendor’s request for approval. It is estimated that 16 vendors will spend 30 minutes preparing and submitting the request.
7 CFR 764.458(a)(4) – Vendor Revocation of Agreement to Provide Borrower Training
Vendors may revoke the agreement to provide borrower training by providing FSA with a 30-day written notice. It is estimated that 11 vendors will spend 15 minutes each preparing and submitting a revocation request.
7 CFR 764.458(b) – Renewal of Vendor Approval to Provide Borrower Training
Vendors receive approval to provide borrower training for a period of 3 years. To maintain their status, the vendor must provide a written request to renew the agreement along with any changes in course curriculum, instructor or cost. This information is necessary to ensure that continued approval of the vendor and the courses provided will meet the objectives of the statutorily mandated borrower training requirements. It is estimated that 133 vendors will spend 6.5 hours preparing and submitting a request for renewal.
Vendors are required to provide the agency with a periodic progress report for each borrower enrolled in training. The reports indicate whether the borrower is attending sessions, completing the training program, and demonstrating an understanding of the material. This evaluation is necessary to ensure the training provides the intended benefit to the borrower. It is estimated that 396 vendors will submit an average of 6.72 evaluations per year and that vendors will spend approximately 30 minutes preparing and submitting each evaluation.
7 CFR 765.205 and 7 CFR 766.106 RE Mortgage/Modification Agreement
The 973 respondents will complete mortgage modification agreements based on state law requirements, when FSA completes servicing requests under 7 CFR 765.205 and 7 CFR 766.106.
7 CFR 764.51(b)(15) - Conservation Plan
Producers/landowners can develop a written plan with USDA’s Natural Resource Conservation Service (NRCS). The purpose of this voluntary and confidential plan is to provide a blueprint for the future of the operation’s resources by recording management decisions and the conservation practices planned for use on and maintenance of a farm. A conservation plan includes producer/landowner-determined objectives and goals, aerial photographs or diagrams of the fields, descriptions of treatment decisions, and other items. FSA estimates that 1,612 applicants will spend 15 minutes providing a copy of this plan.
7 CFR 764.51(b)(16) – Transition to Organic/Sustainable
The Natural Resources Conservation Service (NRCS) provides financial and technical assistance for the development of a “Conservation Plan Supporting Organic Transition.” The conservation activity plan documents decisions by producers and growers who agree to implement a system of conservation practices which assist the producer to transition from conventional farming or ranching systems to organic production systems. Once certified, organic producers and processors can label their products as organic as long as they continue to follow the organic regulations. FSA estimates that 9 applicants will spend 15 minutes complying with and/or submitting required documentation to the agency.
A statutory eligibility requirement that must be met by applicants is that other credit at reasonable rates and terms, including a loan guaranteed by the agency, is not available. Applicants, including individual entity members, must submit documentation that other credit is not available. It is estimated that 19,110 applicants will spend one hour gathering and submitting this documentation.
Collections contained in 7 CFR 764 that will be approved under OMB Control Numbers for other CFR parts/OMB Control Numbers
The following table summarizes the information collections included in 7 CFR 764, for which approval has been obtained or requested under the OMB Control Number for another CFR part that requires the same collection of information for a difference purpose.
CFR citation |
Description |
Approved under |
764.51 |
Financial information to process loan making request |
0560-0238 |
764.51 |
Production information to process loan making request |
0560-0238 |
764.51 |
Operating plan |
0560-0238 |
764.51 |
Copies of tax returns |
0560-0238 |
764.51 |
Evidence that environmental requirements have been met to process loan request |
0575-0094 |
764.402 |
Use of supervised bank account to deposit loan funds when other options are not available |
0560-0238 |
3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decisions for adopting this means of collection. Also describe any consideration of information technology to reduce burden.
Information collections obtained using FSA forms may be submitted electronically provided the applicant has obtained and activated a USDA account with Level 2 access that allows for electronic submissions. All forms that the applicant has to complete in their entirety, or review and execute, are posted on the e-Gov website at http://www.sc.egov.usda.gov. For forms the applicant is required to complete in their entirety, the fillable version of the form, as well as detailed instructions on completing the form, are included on the e-Gov website. Forms prepared by FSA, that the public simply reviews and signs, are also provided on the e-Gov website. However, in lieu of detailed instructions for completing those forms, the instructions simply state that the forms are provided on the website for information purposes only.
Non-form information collections require providing copies of documents in the applicant’s possession or providing written replies to agency requests or offers. Non-form collections, as well as all agency forms, may be submitted in person at the local agency office, by mail, or by facsimile. Further, applicants with established Level 2 accounts may provide non-form information collections as any kind of non-executable attachments, such as PDF, doc, xls, or text formats.
Even though forms are available on the e-Gov forms website, it is FSA’s experience that very few applicants and borrowers utilize this option. Most applicants obtain and return forms and non-forms to the agency office as they feel a person-to-person meeting is beneficial. The information required from applicants and borrowers is mainly financial in nature, and farmers are not comfortable with providing it through electronic means, notwithstanding the adequacy of agency security safeguards in place. Most of FSA’s applicants and borrowers reside in rural areas, which often do not have access to high speed internet connection. Moreover, applicants and borrowers often seek additional clarification and explanation of the requirements, as well as explanation of the consequences of not complying with the requirements, from agency officials.
Currently, FSA can only accept forms electronically from individual applicants. Electronic signature authentication for entity borrowers is not currently available; however, the agency is anticipating that this option will be available in the near future, provided adequate appropriations are received from Congress to ensure that appropriate system security safeguards are met. Further, FSA is currently exploring options available for applicants and borrowers to respond to, and provide information to, agency-initiated actions. This option will allow FSA to pre-fill forms with information already in its possession, as there are several instances in the loan making process where the agency completes part of the information collection instrument and provides it to the applicant to review and execute. In turn, when this option becomes available, FSA may initiate interactions and transactions that only require the applicant or borrower’s review and approval or disapproval, as in those situations the applicant or borrower may not need to visit FSA office to complete the transaction.
Lastly, even though USDA and FSA have publicized and provided information in outreach materials, during stakeholder meetings, as well as agriculture-related meetings and symposiums, on the option to provide information electronically, applicants and borrowers still prefer going to the agency office to obtain forms and information on how to apply for loans and servicing than obtaining forms and information from the internet. Therefore, FSA estimates that less than one percent of responses will be provided through the internet.
As noted above, electronic signature authentication is currently limited to applicants and borrowers who have obtained and activated a USDA account with Level 2 access.
4. Describe efforts to identify duplication. Show specifically why similar information already available cannot be used or modified for use for the purposes described in Item 2 above.
The burden established in this regulation is required under the provisions of the CONTACT, which mandates specific actions be taken when making loans to FLP applicants.
FSA/FLP personnel with expertise in making loans have reviewed the information collections required under this CFR part to eliminate any duplicative or unnecessary collections of information. The information contained in this collection is made part of the case file and, when reasonably current, may be used in lieu of re-submission by the applicant. However, financial information that is collected at another time may be dated and not useful for the specific action being considered. Various program areas within the agency share data; however, information collections established in this regulation would typically not be available from another agency. Therefore, the potential to share data with other USDA agencies is limited.
5. Methods to minimize burden on small businesses or other small entities (Item 5 of OMB Form 83-I), describe any methods to minimize burden.
FSA has made every effort to minimize burden on small businesses and small entities. FSA only requires collection of information when necessary to act on an applicant or borrower’s request for assistance. The information required by this regulation is financial in nature and similar to that required to complete Federal tax returns, make business decisions or to obtain a loan from any commercial lender. Thus, it places no additional burden on small businesses above that required in the normal course of business. There are about 167,559 small businesses or entities.
6. Describe the consequences to Federal program or policy activities if the collection is not conducted or conducted less frequently, as well as any technical or legal obstacles to reducing burden.
Since FSA is mandated to provide supervised credit, failure to collect the information, or collecting it less frequently, could result in the failure of the farm operation or loss of FSA security property. The collection of information is required as a result of an applicant’s specific request, is obtained on an as-needed basis, and is used to document the applicant’s eligibility for the requested loan. Accurate decisions when making a loan depend on current financial information and actual history and potential of the farming operation in order to carry out the program as intended. There is no regular reporting schedule related to the information collection requirements in this CFR part. If the information were not collected, or collected less frequently, FSA would be unable to meet the congressionally mandated mission of its loan programs.
7. Explain any special circumstances that would cause an information collection to be conducted in a manner:
Requiring respondents to report information more frequently than quarterly. There are no information collection requirements that require information more frequently than quarterly.
Requiring written responses in less than 30 days. There are no information collection requirements that require written responses in less than 30 days.
Requiring more than an original and two copies. There are no information collection requirements that require more than an original or single copy of a document.
Requiring respondents to retain records for more than 3 years. There are no such requirements.
No utilizing statistical sampling. There are no such requirements.
Requiring the use of statistical sampling which has not been reviewed and approved by OMB. There are no such requirements.
Requiring the pledge of confidentiality. There are no such requirements.
Requiring submission of propriety trade secrets. There are no such requirements.
8. Describe efforts to consult with persons outside the Agency to obtain their view on the availability of data, frequency of collection, the clarity of instructions and record keeping, disclosure, or reporting format (if any), and on data elements to be recorded, disclosed, or reported.
The Federal Register notice for 60-day comment period was published on February 5, 2019 at 84 FR 1700-1701. There were no comments received on all aspects of the collection.
FSA maintains close contact with borrowers through FSA’s general field representatives (GFR) and a headquarters’ staff. GFR’s have direct personal contact with the applicants in connection with the fulfillment of FSA requirements. GFR’s pass on any substantive comments to the headquarters staff. Staff is readily available to assist/help the Agency’s customers. FSA works closely with lending institutions and a nationwide network of lending institutions as part of the Farm Credit System, which provides supplemental loan funds to borrowers.
The following individuals were consulted regarding this information collection, and there were no comments on the forms and the collection process.
Carl Leis-715-323-8352.
Denise Voorhees-901-832-9595.
Chris Robertson-870-878-2825.
9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.
There are no payments or gifts provided to respondents.
10. Describe any assurance of confidentiality provided to the respondents and the basis for the assurance in statute, regulation, or Agency policy.
FSA forms that serve as collection instruments contain a Privacy Act statement identifying circumstances under which the information collected may be released. This statement is based on the Privacy Act, the Freedom of Information Act and the Agency’s System of Records that has been published in the Federal Register. Agency policies, as well as a copy of the System of Records, are published in FSA handbooks 2-INFO and 3-INFO. No further assurance of confidentiality is provided to applicants or borrowers.
11. Provide additional justification for any question of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.
The information collected is of a financial nature. As a condition for the receipt of program benefits, respondents must provide total disclosure of income data and a history of their business dealings that is often considered sensitive. Regardless, the information is required to properly document FSA’s decision pertaining to loan making and servicing actions.
12. Provide estimates of the hour burden of the collection of information.
The estimate of hour burden of the information collections is as follows:
Total Number of Unduplicated Respondents………………………………184,871.
Reports Filed Per Person……………………………………………………….3.8.
Total Annual Responses…………………………………………………….698,394.
Total Annual Burden Hours…………………………………………….…..217,927.
The estimate of annual cost for the information collections is as follows:
Respondent’s Cost per Hour - Farmers $49.68.
Business $52.87.
Total Annual Respondent Cost – Farmers/business……… 217,927 X $102.55.
Total..…………………………… 22,348,414.
Respondent cost per hour was derived by using U.S. Bureau of Labor Statistics Occupational Employment and Wages, May 2019, Table 11-9013-Farmers and Ranchers, and Other Agricultural Managers. The U.S. mean hourly wage for this group is $38.43 hourly and $79,940.00 annually, as measured by the Bureau of Labor.
Respondent cost per hour was derived by using U.S. Bureau of Labor Statistics Occupational Employment and Wages, May 2019, Table 13-2072-Loan Officers. The U.S. mean for loan officer’s income, as measured by the Bureau of Labor is $79,940.00 annually or $38.43. Also, Also, A total employer compensation costs (fringe benefits) for all workers averaged $11.25 per hour worked from Bureau of Labor Statistics website, specifically in the document of the employer costs for employee compensation, September 2018.
The final rule will govern the processing of MLs and requires these collections. FSA estimates a maximum of 439 loans will be made each fiscal year using the FOML application process. Cost per hour for all respondents was derived from the U.S. Department of Labor’s Occupational Employment and Wages, May 2019, tables which are found at the Bureau of Labor Statistics website at http://stats.bls.gov/oes.
13. Provide an estimate of the total annual cost burden to the respondents or record keepers resulting from the collection of information.
The regulation and associated information collections place no burden costs on respondents for capital, start-up, operation, maintenance, or the purchase of services.
14. Provide estimates of annualized cost to the Federal Government.
FSA employees review information provided by applicants, borrowers, and third parties and make eligibility and feasibility determinations. FSA estimates that its employees spend 2,648,240 hours reviewing and processing the collections included in this docket.
Averaging the GS-9 through GS-12 (2019 RUS-Salary Table) salaries indicates an average employee salary of $52,934 per year. Standard adjustments recommended by FSA’s Budget Division of 33.3% are added for benefits and miscellaneous expenses ($18,808), for a total average cost for a Farm Loan Program employee salary of $71,742 per year, which divided by 2080 hours equals an hourly salary of $34.49 (https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2019/GS.pdf).
Therefore, the estimated annual cost to the Federal Government is:
2,648,240 X $34.49 = $91,337,797.
15. Explain the reason for any program changes or adjustments reported in Items 13 or 14 of the OMB Form 83-I.
The total of burden hours decreased by -125,832 hours since the last OMB approval. The program changes of -80,110 hours and -21 responses were decreased due to a removal of travel times and minor calculations to the numbers.
The annual number of responses decreased slightly by -22, and the number of respondents increased by +2,610 in the collection due to more respondents (borrowers) participating in the Direct Loan Making Program. This was an adjustment by -45,722 hours.
16. For collection of information whose results will be published, outline plans for the tabulation and publication.
The information collections required under this regulation will not be tabulated or published.
17. If seeking approval to not display the expiration date for the OMB approval of information collection, explain the reasons that display would be inappropriate.
While the forms are available electronically at www.sc.egov.usda.gov, hard copies of each form are also maintained in State and County Offices. Displaying the expiration date results in the need to dispose of existing supplies and reprinting of the forms with the new expiration date each time the approval is renewed. This increases printing costs for the agency and results in the need to revise forms posted to the website.
18. Explain each exception statement to the certification statement identified in Items 19 and 20 on OMB Form 83-I.
There are no exceptions requested.
| File Type | application/msword |
| File Title | United States Department of Agriculture |
| Author | Bill Cobb |
| Last Modified By | SYSTEM |
| File Modified | 2019-05-28 |
| File Created | 2019-05-28 |