Farm Storage Facility Loans


Financing for farmers to build or upgrade storage, cold storage, and packing facilities

On-farm storage facilities can help farmers succeed financially by giving them greater control over their products and the timing of marketing. USDA’s Farm Service Agency (FSA) provides low-interest loans for farmers to build storage units, upgrade and expand existing storage, or purchase mobile storage facilities. Historically, these loans have primarily benefited grain farmers. Recent changes to the program, however, have expanded this support to help fruit and vegetable producers finance cold storage, washing and packing sheds, and portable storage equipment.

These changes will improve farmers’ ability to finance storage and packing sheds to keep their food fresh and safe prior to marketing, and ultimately enhance their capacity to sell in local and regional food markets. For fruit and vegetable growers, especially small and mid-scale family farmers, packing and storage sheds are critical equipment –farmers use these sheds to wash, sort, grade, label, box, and store their product before it heads to market.

Learn More About Farm Storage Facility Loans:

Program Basics

The Farm Storage Facility Loan (FSFL) Program, administered by FSA, provides low-interest loans for producers to build, upgrade, or purchase permanent or portable facilities to store commodities, including fruit and vegetable cold storage, washing, packing, and handling buildings and equipment. Click here to download a program fact sheet.

The following products are currently eligible for farm storage facility loans:

  • Corn, grain sorghum, rice, soybeans, oats, peanuts, wheat, barley, malted grains, or minor oilseeds harvested as whole grain
  • Corn, grain sorghum, wheat, oats or barley harvested as other-than-whole grain
  • Other grains (triticale, spelt, buckwheat, and rye)
  • Hay and renewable biomass
  • Pulse crops (lentils, chickpeas, dry peas)
  • Seed cotton
  • Fruits (includes nuts) and vegetables
  • Honey, maple sap, and maple syrup
  • Meat, poultry, milk, eggs, cheese, butter, and yogurt
  • Aquaculture
  • Floriculture and hops

Eligible uses for these types of loans include:

  • Grain storage cribs, bins, and silos, and related electrical equipment
  • Equipment to maintain, improve, or monitor stored grain quality
  • Grain drying equipment
  • Seed cotton handling, storage, and transport equipment
  • Hay and biomass storage structures
  • Cold storage buildings and equipment
  • Packing sheds and handling equipment
  • Portable storage structures, portable equipment, and storage and handling trucks

Structures and equipment generally must have an expected useful life of at least 15 years, which includes both new and used equipment. Facilities that are not for the sole use of the borrower(s) are not eligible.

For fruit and vegetable cold storage facilities, eligible uses include:

  • New and used structures suitable for cold storage
  • New and used walk-in prefabricated permanently installed coolers
  • New and used permanently affixed cooling, circulating and monitoring equipment
  • Electrical equipment integral to the proper operation of a cold storage facility
  • An addition or modification to an existing storage facility

Additionally, fruit and vegetable producers may use FSFLs for structures and equipment required to get fruits and vegetables washed, treated and packed or otherwise required to maintain the quality of the crop. Items that can be financed include: baggers, batch dryers, boxing equipment, brush polishers, cold dip tanks, conveyors, drying tunnels, food safety-related equipment, hoppers, hydrocoolers, quality graders, scales, sealants, sorting bins/tables, vacuums, washers, waxers, and weight graders.

Eligible cost items include: purchase price and sales tax, cost of new materials, shipping and delivery, site preparation costs, installation costs, off-farm paid labor, and appraisals and legal fees.

The maximum loan amount is $500,000. A cash down payment of 15 percent and a $100 non-refundable application are required. Loan terms are for seven, 10, or 12 years depending on the amount of the loan.

For loans up to $50,000, there is also a microloan option available that requires less paperwork and fewer eligibility requirements. For these smaller loans, farmers are only required to provide a 5 percent down payment and are able to self-certify their production history and storage needs, rather than being required to document 3 years of production history. The loan terms for microloans are three, five, and seven years, depending on the amount of the loan.

For both loan types, the interest rate is fixed and set at the rate of interest charged on comparable U.S. Treasury securities (a lower rate than would be available commercially). See the USDA Farm Storage Facility Loan program page for current interest rates. Loans are repaid in equal amortized installments.

For loans that exceed $100,000, the borrower must provide a first lien on the real estate where the facility is situated, other real estate sufficient to secure the loan, or a letter of credit sufficient to protect the government’s interest. Loans of up to $100,000 may be secured by a promissory note only.

One partial disbursement of up to half the anticipated total cost is available when that portion of the structure has been completed. The final disbursement will be made when the entire structure has been completed and inspected by a USDA representative. The local FSA county committee must approve all loans.

Eligibility

To be eligible for FSFL loans, the borrower must:

  • Produce an eligible commodity
  • Demonstrate a storage need
  • Have a satisfactory credit rating and the ability to repay the loan
  • Provide proof of all peril insurance and, if applicable, flood insurance
  • Provide proof of multi-peril crop insurance (MPCI) or Non-Insured Crop Assistance Program (NAP) coverage; however, fruit and vegetable growers may request a waiver from FSA from the requirement to hold MCPI or NAP coverage

Several other eligibility criteria may also apply.

FSA Direct Operating Loans, including Microloans, can be used in conjunction with FSFLs. FSA state and local offices have been encouraged by USDA to leverage both programs, as well as the knowledge and expertise of farm program and farm loan staff, to promote creative solutions to producers’ needs for storage and equipment. Using both low-interest loan programs in combination may be able to fully satisfy a grower’s financial support need for storage, washing, packing, and transport.

The Program in Action

Since the inception of the program in 2000, more than 33,000 loans have been issued for on-farm storage. Examples of FSFL success stories include:

  • Hearty Roots Community Farm (NY) – Lindsay and Ben Shute, owners of Hearty Roots Community Farm in the Hudson Valley of New York State, received a FSFL to finance a cold storage and packing facility for their community supported agriculture (CSA) operation. They received a crop insurance and non-insurance crop disaster assistance program (NAP) waiver from FSA after demonstrating that such insurance was not meaningful for their CSA operation. They were also able to use an alternative method to determine their storage facility needs that were more appropriate to a highly diversified operation. Their experience has helped open the door for additional FSFLs to finance sorting, washing, grading and other critical handling needs of small, diversified specialty crop farms.  
  • BelleWood Acres (WA) – John and Dorie Belisle own and operate a 31-acre apple orchard in northwest Washington, near the Canadian border. After a downturn in the wholesale apple market, they used a Farm Storage Facility Loan to purchase and install a cooler. The introduction of this new equipment increased their on-farm storage capacity and allowed them to move forward with plans to diversify their operation and markets opportunities.

How to Apply and Program Resources

Loan applications should be filed in the local FSA Office that maintains the farm’s records. To find your local office, use the service center locator. The Farm Storage Loan application form is CCC Form 0185 and can be found on the FSFL overview page.

Additional resources:

Read more about farm storage facility loans and other credit programs on the NSAC blog:

Program History, Funding, and Farm Bill Changes

The FSFL program in its current iteration was started administratively in 2000 by FSA. The program has permanent mandatory funding through the Commodity Credit Corporation (CCC) and does not require a congressional authorization or an appropriation. The costs of running the loan program are automatically reimbursed to the CCC.

Congress got involved in FSFLs through the 2008 Farm Bill, in which they added hay and renewable biomass as well as fruits and vegetables as eligible commodities. The 2008 Farm Bill also added cold storage as eligible facilities, increased the maximum loan term to 12 years, increased the maximum loan about to $500,000, and allowed for partial loan disbursement during construction.

In 2014, FSA took several actions to improve the program, particularly for small and mid-sized farms in the local and regional food space:

  • Instead of providing the typically required three-year acreage yield reports, producers can provide information on sales, volume sold (based on farmers market space or vehicle size), CSA shares, or other similar measures.
  • The FSFL requirement to first obtain crop insurance (or NAP coverage) can be waived on a case-by-case basis, taking into account a variety of factors that result in the determination that crop insurance or NAP would not provide meaningful risk protection for the producer. These factors may include, but are not limited to: the application burden, number of crops, typical area planted to each crop, and whether the producer markets their product in a way that commands a premium above traditional wholesale market prices (e.g., direct-to-consumer, certified organic, etc.).
  • Because specialty crops are often processed before being placed in cold storage to maintain quality, the loans can also finance packing sheds and certain handling equipment (e.g., packaging, cold dip tanks, sorting and grading bins and tables, washers, and waxers).

The loan level that triggers additional security requirements was also increased to $100,000 in 2014, up from the $50,000.

In 2015, FSA expand the program to also finance on-farm storage for meat, dairy, and eggs. The FSA notice to its field offices also covers flowers, hops, and rye. In 2016, FSA modified the program’s regulations to also cover mobile farm storage equipment and trucks, and to create a streamlined microloan option with a lower down payment and less paperwork required.

Authorizing Language

Section 1614 of the Food, Conservation and Energy Act of 2008 creates the permanent authorization for the storage facility loan program, to be codified at 7 U.S.C 8789.


Last updated in March 2020.