Anne M. Eberhardt

Loans to be Offered for Ice Storm Relief

Emergency loans have been approved for KY equine farms damaged by the ice storm.

Kentucky Thoroughbred farms seeking financial aid to cover their immense repair efforts for damages caused by an ice storm the week of Jan. 25 could soon receive some federal relief in the form of a loan. 

After Kentucky Gov. Steven Beshear declared a state of emergency, and President Obama declared federal disaster emergency, Farm Service Agency Emergency Loan regulations were revised per the Farm Bill to allow FSA to approve emergency loans to equine farmers whose primary enterprise is to breed, raise and sell horses, and who have experienced a physical loss due to weather related damages to their property.

According to a release, “primary enterprise” is defined as more than 50% of the total equine income coming from the production and sale of horses. These losses may include damages to the buildings, fence, hay, pasture, etc. FSA will later revise the EM regulations in more detail to include the possibility of production losses due to weather. FSA’s regulations will not be changed to allow horse operations to be eligible for its Farm Ownership and Operating loan programs, however.

Horse owners who are solely involved in racing, showing, training, boarding, pleasure, or other non-production pursuits will not be eligible for these emergency loans. Further, horse owners who qualify by having more than 50% of their gross farm income from production and sale of horses and other farm enterprises, such as cattle, will only qualify for losses considering this portion of their operation. They can show no loss regarding ineligible horse enterprises.

Loans may be approved at 3.75% up to a maximum loan amount of $500,000. Loan terms may be for a period of one to 40 years, depending upon the intended use of the loan funds, type of security, and the available cash flow. All applicants must show a need for the EM loan in order to obtain adequate credit at reasonable rates and terms which they can reasonably be expected to meet.

Many times conventional lenders may be either unwilling to make the requested loan due to a tight cash flow, failure to meet down payment, or equity requirements or their inability to provide credit through anything but a demand note with very limited terms. All applicants must possess an acceptable credit history. Loan funds may be used for a variety of purposes, obviously the primary use being to repair or replace the damaged property.

In order to be considered for an EM loan, one’s operation must be located in a county declared a disaster area by the president, secretary of agriculture, or FSA administrator.

Farm owners have eight months from the disaster declaration to apply for a loan. All of Kentucky's 120 counties are currently eligible based on a secretarial designation made due to drought and high winds last year.

The deadline for applications dealing with this declaration is July 1. There is an administrator’s designation for the recent ice storm which covers 112 counties excluding the counties of Boone, Bracken, Campbell, Kenton, Knox, McCreary, Pendleton, and Whitley. Applications pertaining to losses from this designation may be received through Oct. 26. There are various other designations now pending concerning smaller areas of the state.

Inquiries or applications for these loans may be made by contacting one’s local FSA office. 

The Kentucky Thoroughbred Association, Kentucky Thoroughbred Owners and Breeders, and American Horse Council are still in discussions with representatives of the United States Department of Agriculture in hopes of becoming eligible for cost share dollars. The loan program may be an alternative.