FSA’s newly authorized Highly Fractionated Indian Land Loan Program was highlighted at a three-day 2016 USDA Tribal Outreach Forum in Bozeman, Montana. Connie Holman of the national Farm Loan Program staff in Washington D.C., visits with tribal officials about program changes authorized by the 2014 Farm Bill. More than 100 people attended the tribal forum representing all seven Indian reservations in Montana.
By Jennifer Cole, Public Affairs Specialist, Montana Farm Service Agency
Improved lending opportunities for Indian tribes and tribal members to purchase tribal agricultural land with multiple owners are now possible thanks to new authority in the 2014 Farm Bill that authorizes a total of $10 million for the program in fiscal year 2016.
“FSA’s Highly Fractionated Indian Land Loan Program (HFIL) allows USDA to provide revolving loans to qualified intermediary lenders who can relend the funds to qualified tribes and individuals to start and expand farming and ranching operations on tribal lands,” Connie Holman, of the FSA national office in Washington D.C., told attendees on the opening day of the USDA Tribal Outreach Forum meeting held in Bozeman, Montana, on March 23-25, 2016.The program, which has been available since Dec. 1, 2015, is one solution to a longstanding barrier to financing highly fractionated Indian land. Under the 1887 Dawes Act, Indian reservation land was divided and allotted to individual tribal members. From generation to generation, while title ownership was divided and parceled between heirs, the land was not. As a result, land once owned by a single person could today be owned by hundreds or thousands of individuals, resulting in what is known as “highly fractionated Indian land.” In many instances, landowners are unknown or cannot be located, which complicates the coordination of ownership or prevents the use of the property altogether. There are more than 245,000 owners of three million fractionated land interests, spanning approximately 150 Indian reservations.
After more than a dozen tribal meetings across the country, USDA implemented a solution to this longstanding barrier to financing by now providing an opportunity for tribes and tribal members to submit a farm loan application to a USDA-approved intermediary lender. The lenders may be private or tribal nonprofit corporations, public agencies, Indian tribes, or lenders subject to federal or state regulation (such as a credit union or other financial institution). FSA will lend to the intermediary, which will relend to the applicant. The intermediary lender also will administer the loan for the applicant.
The ultimate recipient will be a Native American tribe, tribal entity, or member of either that receives a loan from an intermediary lender’s HFIL revolving fund. They must be able to purchase the fractionated interest resulting in majority ownership of at least 51 percent, comply with conservation requirements on their land, agree to continue to use the land for agricultural purposes during the term of the loan and comply with lender requirements.
For more information about the program, contact farm loan specialist Carrie Novak at 202-720-1643. To learn more about the USDA Office of Tribal Relations, click here.
