US Code

Public Law 119-73 (01/23/2026)

7 U.S.C. § 1923

Purposes of loans

(a)

Allowed purposes

(1)

Direct loans

A farmer or rancher may use a direct loan made under this subchapter only for—
(A)
acquiring or enlarging a farm or ranch;
(B)
making capital improvements to a farm or ranch;
(C)
paying loan closing costs related to acquiring, enlarging, or improving a farm or ranch;
(D)
section 1924 of this title paying for activities to promote soil and water conservation and protection described in on a farm or ranch; or
(E)
refinancing a temporary bridge loan made by a commercial or cooperative lender to a farmer or rancher for the acquisition of land for a farm or ranch, if—
(i)
the Secretary approved an application for a direct farm ownership loan to the farmer or rancher for acquisition of the land; and
(ii)
section 1994(b) of this title funds for direct farm ownership loans under were not available at the time at which the application was approved.
(2)

Guaranteed loans

A farmer or rancher may use a loan guaranteed under this subchapter only for—
(A)
acquiring or enlarging a farm or ranch;
(B)
making capital improvements to a farm or ranch;
(C)
paying loan closing costs related to acquiring, enlarging, or improving a farm or ranch;
(D)
section 1924 of this title paying for activities to promote soil and water conservation and protection described in on a farm or ranch; or
(E)
refinancing indebtedness.
(b)

Preferences

In making or guaranteeing a loan under this subchapter for purchase of a farm or ranch, the Secretary shall give preference to a person who—
(1)
has a dependent family;
(2)
to the extent practicable, is able to make an initial down payment on the farm or ranch; or
(3)
is an owner of livestock or farm or ranch equipment that is necessary to successfully carry out farming or ranching operations.
(c)

Hazard insurance requirement

(1)

In general

After the Secretary makes the determination required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subchapter unless the farmer or rancher has, or agrees to obtain, hazard insurance on any real property to be acquired or improved with the loan.

(2)

Determination

Not later than 180 days after , the Secretary shall determine the appropriate level of insurance to be required under paragraph (1).

Pub. L. 87–128, title III, § 30375 Stat. 307Pub. L. 87–703, title IV, § 401(1)76 Stat. 631Pub. L. 90–488, § 182 Stat. 770Pub. L. 95–113, title XIV, § 1448(a)91 Stat. 1011Pub. L. 96–438, § 1(1)94 Stat. 1871Pub. L. 97–98, title XVI, § 160295 Stat. 1346Pub. L. 104–127, title VI, § 602(a)110 Stat. 1085Pub. L. 107–171, title V, § 5002116 Stat. 341(, , ; , , ; , , ; , , ; , , ; , , ; , , ; , , .)

Editorial Notes

Amendments

Pub. L. 107–1712002—Subsec. (a)(1)(E). added subpar. (E).

Pub. L. 104–1271996— amended section generally, substituting present provisions for provisions outlining preferences for loans made or insured under this subchapter and defining terms “improving farms” and “qualified non-fossil energy system”.

Pub. L. 97–981981—Subsec. (a). substituted “who have dependent families” for “who are married or have dependent families”.

Pub. L. 96–4381980—Subsec. (b)(1). substituted “the acquisition, installation, and modification” for “the acquisition and installation” and struck out “in any residential structure” after “energy system”.

Pub. L. 95–1131977— designated existing provisions as subsec. (a) and added subsec. (b).

Pub. L. 90–4881968— designated existing provisions as cls. (1), (2), (4), (5), and added cl. (3).

Pub. L. 87–7031962— authorized loans to be made or insured for recreational uses and facilities.

Statutory Notes and Related Subsidiaries

Effective Date of 1996 Amendment

Pub. L. 104–127, title VI, § 602(b)110 Stat. 1085

7 U.S.C. 1923(c)(1)“Section 303(c)(1) of the Consolidated Farm and Rural Development Act [] shall not apply until the Secretary of Agriculture makes the determination required by section 303(c)(2) of the Act.”
, , , provided that: [The Secretary’s determination relating to hazard insurance under this provision was contained in interim rules published , and effective , see 62 F.R. 9351.]

Effective Date of 1981 Amendment

Pub. L. 97–98section 1801 of Pub. L. 97–98section 4301 of this titleAmendment by effective , see , set out as an Effective Date note under .

Effective Date of 1977 Amendment

Pub. L. 95–113section 1901 of Pub. L. 95–113section 1307 of this titleAmendment by effective , see , set out as a note under .

Transfer of Functions

section 2302(b) of Pub. L. 101–624Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by .