USDA provides federal lending guidance for hemp growers

Federal agriculture officials have released new loan guidance for direct and guaranteed loans for hemp producers and to ensure the new commodity is recognized as legal through the U.S. Department of Agriculture’s Farm Service Agency.

“While it’s understood that this new commodity will likely produce some servicing challenges because of state and federal regulations, it should be treated as closely as possible to any other agricultural commodity and serviced in the same manner,” stated the guidance notice, issued last month.

The new guidance provides additional detail for FSA lenders after the agency opened up eligibility for farm loans to hemp farmers with the release of the USDA’s interim final rule last fall.

The document explains the legal parameters for granting loans to hemp farmers, including:

  • Licensing under the USDA, a USDA-approved state or tribal plan or 2014 pilot program.
  • Planned acreage as reported to the FSA after spring planting.
  • Contract to sell crops to show growers have financial resources to repay loan; however the FSA may service loans without a contract if a grower shows they are licensed and have sufficient cash flow without hemp income.
  • Farm operating plan for review by agency official to show production information is reasonable, relative to historical performance and local practices and conditions.
  • Availability of a banking institution authorizing financial transactions.

The guidance notes that many banks are not currently working with hemp farms and businesses.

It also stipulates that the agency will not pay to destory crops testing above the federal 0.3% THC limit.

Learn more about available FSA farm loan programs and requirements for hemp farms here.