Highly Fractionated Indian Land Loan Program

The Highly Fractionated Indian Land Loan Program helps Tribes, Tribal entities, and Tribal members alleviate the problems caused by fractionated interests on tribal lands. Through land consolidation, current and new agricultural operations can improve and expand access to USDA programs, increase agricultural productivity, and save Tribal farmland for future generations. This loan program is financed through revolving loan funds from the Agency and serviced through the approved intermediary lender, Native American Community Development Corporation Financial Services, Inc.

In addition, all other FSA farm loan programs are available for individual Tribal member use.

An ultimate recipient is a Native American tribe, tribal entity, or a member of either that receives a loan from an intermediary lender's HFIL revolving fund. To receive a loan from the intermediary, they must:

• Comply with highly erodible land conservation and wetland conservation requirements on all their land;

• Agree to continue to use the land for agricultural purposes during the term of the loan;

• Agree to comply with the requirements of the intermediary lender;

• Funds may be used to pay costs incidental to land acquisition, including, but not limited to, title clearance, legal services, archeological or land surveys, and loan closing;

• May be used to pay for costs of an appraisal conducted for this loan; and

• Be able to purchase fractionated interests resulting in at least 51 percent ownership.

You do not borrow from FSA directly — FSA capitalizes a revolving loan fund and an approved intermediary lender makes and services the loan to you (7 CFR 769.105(a)).

FSA's HFIL program page publishes these features:

• Loan amounts: "Up to $500,000 per applicant."

• Interest rates: "Competitive interest rates set by the FSA, generally lower than conventional loans." No specific rate is published.

• Repayment terms: "Up to 30 years, depending on the applicant's financial situation and the loan purpose."

• Eligible use: "Funds can be used to purchase fractional interests in trust or restricted lands to consolidate ownership and enhance land usability and productivity."

No down payment, cost-share, or match requirement is published, and no application fee is published.

Two conditions decide whether a purchase qualifies. Neither is stated on the FSA program page — both come from the program regulation, 7 CFR 769.105(b): the loan "[m]ust be used to acquire and consolidate at least 50 percent of the highly fractionated Indian land parcel and interests in the land," and "[m]ust finance land that will be used for agricultural purposes during the term of the loan." The same section allows loan funds to cover costs incidental to land acquisition — title clearance, legal services, archeological or land surveys, loan closing — and the cost of the required appraisal. Loan funds may not be used for land improvement or development, buildings or personal property, or operating costs, and may not contribute to erosion of highly erodible land or conversion of wetlands (7 CFR 769.106(a)).

Beyond that, the intermediary lender negotiates rate, term and collateral with you within the limits of its Intermediary Relending Agreement (7 CFR 769.107), so confirm those with the lender.

Follow the instructions to complete the FSA-2620 form. Submit the finished form to your local FSA office. At that time, you may be asked to complete additional FSA forms.

• USDA Office of Tribal Relations

• National Agricultural Library: Tribal Communities Resources and Planning Tools

• Intertribal Agriculture Council

• Indian Land Tenure Foundation

• Alaska Federation of Natives

• Tools: U.S. Small Business Administration Business Development Growth for Native American Businesses

• Tools: U.S. Small Business Administration How to Write A Business Plan

• Farm Answers Library