Conservation Loans

Important Update:

Please note that the Grassroots Guide has not yet been updated to reflect changes made by the 2018 Farm Bill, which was passed and signed into law in December 2018. We are in the process of updating the Guide and expect to publish an updated version in the spring of 2019. In the meantime, please use this guide for basic information about programs and important resources and links for more information, but check with USDA for any relevant program changes made by the 2018 Farm Bill. Also, check out our blog series covering highlights from the new farm bill. 

Helping farmers and ranchers finance natural resource conservation projects on their land

Farmers are first and foremost stewards of the land, and are an invaluable asset in conserving our nation’s precious soil, keeping our waterways clean, and fostering habitat for wildlife and biodiversity. However, many young, beginning farmers and other operators of small and mid-sized farms who want to implement conservation measures on their working farm and ranch land do not have the upfront funds available to implement practices like water conservation systems or fencing and watering systems for rotational grazing. Federal low-interest conservation loans can help to fill this credit gap by assisting farmers and ranchers in meeting conservation compliance requirements and establishing permanent conservation practices on their farms.

 Learn More About Conservation Loans! 

Program Basics

The 2014 Farm Bill reauthorizes the loan authority for USDA’s Farm Service Agency (FSA) to provide direct or guaranteed conservation loans to qualified borrowers to cover the costs of qualified conservation projects. A conservation project is “qualified” for a loan if it is included in a conservation plan that is approved by the Natural Resources Conservation Service (NRCS), and can include a range of practices including establishing structural practices like installing a water-conserving irrigation system, vegetative practices like creating permanent pasture, or management practices like an integrated pest management system.

As with all other Farm Service Agency loans, direct loans from the government are capped at not more than $300,000, while guaranteed loans from commercial lenders but backed by the government are currently capped at $1.355 million (the rate is adjusted annually for inflation). While the farm bill authorizes both direct and guaranteed loans, in recent years Congress has only provided funding for guaranteed loans, though farmers needing direct loans can generally apply for direct loans for conservation purposes through the regular FSA direct operating loan program.

Conservation loans operate under the same rules and loan limitations as regular direct and guaranteed FSA farm ownership loans with two exceptions. First, for guaranteed loans FSA can guarantee no more than 80 percent of the principal amount of the loan (lower than the normal rate) or 90 percent in the case of a beginning or socially disadvantaged farmer. Second, for both direct and guaranteed loans, the borrower does not have to be a family-sized farm, does not have to demonstrate an inability to secure credit from private sources at reasonable terms, and does not have to apply for commercial credit during the term of the loan should it become available at reasonable terms.


Farmers or ranchers who are eligible to apply for a conservation loan include sole proprietors, farmer cooperatives, private corporations, partnerships, or limited liability companies. And although the program is open to any eligible farmer or rancher, priority is given to:

  • qualified beginning or socially disadvantaged farmers and ranchers;
  • owners or tenants who use the loans to convert to sustainable or organic agricultural production systems; and
  • producers who use the loans to build conservation structures or establish conservation practices to comply with highly erodible land “conservation compliance” requirements for obtaining commodity program or crop insurance subsidies.

In addition, USDA is to give strong consideration to applicants who are on waiting lists to receive farm bill conservation program financial assistance.

The Program in Action

Since 2008, FSA has provided over $16 million in loan funding to farmers through its direct conservation loan program and has guaranteed over $778,000 in additional loan capital. This translates to over 230 loans made to farmers and ranchers to help them finance conservation efforts on their farms.

Conservation loan funds can be used to implement a conservation practice approved by the Natural Resources and Conservation Service (NRCS), such as reducing soil erosion, improving water quality, and promoting sustainable and organic agricultural practices.

Interested applicants who do not already have NRCS-approved conservation plans should work with the local NRCS staff to develop a conservation plan. New or existing conservation plans must be NRCS approved before FSA can provide financing.

Examples of some of the conservation practices that could be funded through this loan program include:

  • Installation of conservation structures or water conservation systems;
  • Establishment of forest cover;
  • Establishment or improvement of permanent pasture;
  • Transitioning to organic production;
  • Manure management (including manure digestion systems);
  • Conservation practices needed to comply with highly erodible land “compliance” requirements; and
  • Conservation buffer practices such as grassed waterways, shelterbelts, windbreaks, riparian buffers and filter strips, and living snow fences.

For example, a second generation family farm that has a 75 cow dairy operation and bottles and sells its own milk, used a conservation loan to install a NRCS designed and approved manure storage facility on the farm. They used the loan to purchase and install a state of the art system which will help them manage manure and minimize nutrient leaching on their farm.

How to Apply and Program Resources

 The Conservation Loans program is administered by the Farm Service Agency. Information about the program is posted on the FSA website.

Currently, only Guaranteed Conservation Loans are offered, which are made through a commercial lender, such as a private bank, farm credit institution or other lending institution. Interested farmers should contact their local agricultural lender.

For more information on the program, or to locate a guaranteed private lender in your areas, contact your FSA regional Service Centers or to your state FSA office. You can locate all of the contact information by clicking on your state at the website.

Read about the latest news about farm loan programs on our blog!

Program History, Funding, and Farm Bill Changes

Conservation loans were renewed in the 2002 Farm Bill, and have been reauthorized in both the 2008 and 2014 Farm Bills. The 2008 Farm Bill eliminated the outdated $50,000 limit on direct conservation loans and the limit on the guarantee amount to 75 percent. It also unfortunately removed the requirement that borrowers had to operate not larger than family-sized farms and demonstrate an inability to get credit elsewhere. In addition, the 2008 Farm Bill added priorities for beginning and socially disadvantaged farmers and ranchers. The 1990 Farm Bill created the priorities for sustainable and organic farming systems and for farmers needing to implement conservation compliance.

The 2014 Farm Bill leaves this program mostly intact, but increases the guarantee rate for beginning and socially disadvantaged farmers to 90 percent, in line with other FSA guaranteed loan programs.

All loan programs administered by the Farm Service Agency – including conservation loans – are funded through the annual agriculture appropriations bill. The 2014 Farm Bill authorizes an appropriation for the Conservation Loan program for each year between 2014 and 2018. Although Congress has historically provided appropriations for both direct and guaranteed conservation loans, in recent years, Congress has only provided funding for guaranteed loans.

Conservation Loan Historical Funding Levels

Fiscal Year Funding (in millions)
2013 $138 (guaranteed)
2014 $150 (guaranteed)
2015 $150 (guaranteed)
2016 $150 (guaranteed)
2017 $150 (guaranteed)

For the most current information on program funding levels, please see NSAC’s Annual Appropriations Chart

Authorizing Language

Section 5002 of the Agricultural Act of 2014 amends Section 304(e) of the Consolidated Farm and Rural Development Act of 1972, to be codified at 7 U.S.C. Section 1924(e).

Last updated in October 2016.