Farming comes with its fair share of unpredictability—from sudden weather changes to shifting markets and rising input costs. Even the most experienced producers sometimes need a little extra support. That’s where Government Ag Loan Programs come in.
Government Ag Loan Programs are targeted tools that provide crucial financial relief for farmers who might otherwise be left behind. Whether you're new to farming, recovering from disaster, or facing historic barriers to funding, these programs are designed to support your stability and future growth.
In this article, we’ll break down what Government Ag Loan Programs are, who they’re for, the different types available, and how farmers in Minnesota, South Dakota, and Iowa can take advantage of them.
What Are Government Ag Loan Programs?
Government Ag Loan Programs are designated portions of existing FSA loan programs that are reserved for specific groups of farmers, such as beginning farmers, socially disadvantaged farmers, or those impacted by natural disasters. They are not standalone programs but allocations within existing USDA loan offerings.
By setting aside a portion of funds specifically for these groups, the USDA ensures that underserved producers have equitable access to capital. These set-asides can apply to both Direct Loans (provided directly through the FSA) and Guaranteed Loans (offered through commercial lenders but backed by the USDA).
In times of disaster, a separate program—the Disaster Set-Aside Program (DSA)—helps current FSA borrowers by allowing them to move a scheduled payment to the end of the loan term, easing financial strain during recovery.
Learn more about government-guaranteed ag programs at Peoples Bank.
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Who Qualifies for Government Ag Loan Programs?
Government Ag Loan Programs are designed to ensure that historically underserved or vulnerable farmers get a fair shot at securing financing. You may qualify under one or more of the following categories:
Beginning Farmers
If you've been farming for less than a decade, you're considered a beginning farmer. Beginning farmers also face limits in access to capital, land, and mentorship—Government Ag Loan Programs aim to level the playing field. In recent years, over 40% of direct FSA loan funds were used to support beginning farmers.
Socially Disadvantaged Farmers
This group includes individuals who have faced barriers to access due to race, ethnicity, or gender. In particular, women, Black, Native American, Hispanic, and Asian American farmers may be eligible under this designation.
Farmers Impacted by Disasters
The Disaster Program is available to farmers who have FSA loans and have been affected by declared natural disasters. This includes drought, flooding, or extreme weather events that make repayment difficult.
Think you might qualify? Explore ag loan options at Peoples Bank.
Types of Government Ag Loan Programs & How They Work
Different loan types and borrower categories come with unique eligibility rules and set-aside amounts. Here's a quick overview:
Direct Operating Loans
- 50% of funds are set aside for beginning farmers until September 1 of each fiscal year.
- These loans can be used for essential operating expenses like feed, seed, fertilizer, fuel, and repairs.
Direct Farm Ownership Loans
- 75% of funds are set aside for beginning farmers, including a sub-reserve for down payment assistance and joint financing options.
- Helps farmers purchase or improve farmland, buildings, or irrigation systems.
Guaranteed Loans (Operating and Ownership)
- 40% of guaranteed loans are set aside for beginning farmers during the first half of the fiscal year.
- These loans are issued by private lenders like Peoples Bank but backed by the USDA to reduce risk and encourage lending to new and underserved producers.
Disaster Set-Aside Program (DSA)
- Let eligible borrowers move one annual payment to the end of the loan term.
- Designed to ease pressure on borrowers following USDA-designated natural disasters.
- It doesn’t forgive or reduce debt—it simply delays one payment to support recovery.
Learn more directly from the USDA FSA Disaster Set-Aside Program.
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How to Apply
Whether you're looking for help getting started or recovering from disaster, the first step is to contact your local FSA office or a participating lender like Peoples Bank. Our experienced ag lending team can walk you through the process from start to finish.
Here’s what to expect:
- Confirm Your Eligibility
Determine whether you meet the criteria for beginning farmer, socially disadvantaged status, or disaster impact. Our team can help clarify qualifications. - Prepare Your Farm Business Plan
Most applications require a basic plan that includes cash flow projections, an operating budget, and details about your farm operation. Not sure where to start? Our team can help you build one. - Start Your Application
You can begin your ag loan application directly through our website, or visit one of our ten convenient locations to speak with a lending specialist in person. We'll help match you with the right loan structure and identify available set-aside opportunities. - Apply Early
Set-aside funds are allocated on a fiscal year basis and can run out. The earlier you apply, the better your chances of securing funds.
Want to get a head start? Visit our website to learn more or get started today.
Why This Especially Matters in Minnesota, South Dakota, and Iowa
Agriculture is the backbone of the Upper Midwest—and so are the farmers who keep it running. From family farms in Iowa to emerging operations in Minnesota and South Dakota, producers in this region often qualify for Government Ag Loan Programs but don’t always realize it.
Weather patterns in the area create high risk for drought, excessive moisture, and storm damage, making access to the Disaster Set-Aside Program especially critical. Additionally, our region has a rising number of young and first-time farmers eager to build operations and steward land for the next generation.
By using Government Ag Loan Programs strategically, farmers in our region can better weather short-term financial shocks and invest in long-term stability.
Additional Lending Options at Peoples Bank
In addition to helping farmers access USDA ag loan programs, Peoples Bank offers a wide range of ag lending solutions tailored to the needs of growers, ranchers, and rural landowners across the Upper Midwest. Whether you're expanding your operation, purchasing equipment, or managing seasonal cash flow, our lending team can help you structure financing that supports your long-term success.
Among our most popular offerings are farm real estate loans, which make it possible to purchase land, improve irrigation systems, or refinance existing farmland debt. We also offer equipment loans to help you upgrade or replace essential machinery—from tractors and harvesters to grain dryers and irrigation pumps.
Need more flexibility? Our operating lines of credit give you the working capital you need to manage day-to-day costs like seed, fertilizer, and fuel. And for younger producers just starting out, we specialize in beginning farmer loans that support your first steps in building a sustainable, profitable operation.
Whatever your goal, our ag lending team is here to help. Visit us online to explore your options and learn how we can support your operation today and into the future.
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Support When—and Where—You Need It Most
Government Ag Loan Programs are more than just technical details—they’re powerful tools designed to expand access, offer relief, and ensure the long-term vitality of American agriculture. If you're just starting out, facing new challenges, or wondering if you qualify, now is the time to explore your options.
Assess your situation and reach out to the ag lending specialists at Peoples Bank.
We’re proud to support farmers throughout Minnesota, South Dakota, and Iowa with personalized lending solutions and local decision-making.
Visit our Ag Loans page or stop by one of our ten convenient locations today to get started.