Agriculture Secretary Tom Vilsack Tuesday announced a new microloan program from the U.S. Department of Agriculture designed to help small and family operations, beginning and socially disadvantaged farmers secure loans under $35,000.
The new microloan program is aimed at bolstering the progress of producers through their start-up years by providing resources and increasing equity so that farmers may eventually graduate to commercial credit and expand their operations. The microloan program will also provide a more simplified application process in comparison to traditional farm loans.
"I have met several small and beginning farmers, returning veterans and disadvantaged producers interested in careers in farming who too often must rely on credit cards or personal loans with high interest rates to finance their start-up operations," said Vilsack. "By further expanding access to credit to those just starting to put down roots in farming, USDA continues to help grow a new generation of farmers, while ensuring the strength of an American agriculture sector that drives our economy, creates jobs, and provides the most secure and affordable food supply in the world."
Program administered through FSA
Vilsack said the new microloans represent continuing USDA efforts for beginning farmers and ranchers across the United States. The final rule establishing the microloan program will be published in the Jan. 17 issue of the Federal Register. The interest rate for USDA's new microloan product changes monthly and is currently 1.25%.
Administered through USDA's Farm Service Agency Operating Loan Program, the new microloan program offers credit options and solutions to a variety of producers. In assessing its programs, FSA evaluated the needs of smaller farm operations and any unintended barriers to obtaining financing. For beginning farmers and ranchers, for instance, the new microloan program offers a simplified loan application process. In addition, for those who want to grow niche crops to sell directly to ethnic markets and farmers markets, the microloan program offers a path to obtain financing.
Eligible purchases, upgrades
Producers can apply for a maximum of $35,000 to pay for initial start-up expenses such as hoop houses to extend the growing season, essential tools, irrigation, delivery vehicles, and annual expenses such as seed, fertilizer, utilities, land rents, marketing, and distribution expenses. As their financing needs increase, applicants can apply for an operating loan up to the maximum amount of $300,000 or obtain financing from a commercial lender under FSA's Guaranteed Loan Program.
USDA farm loans can be used to purchase land, livestock, equipment, feed, seed, and supplies, or construct buildings.
National Farmers Union President Roger Johnson praised the new program in a statement Tuesday, calling it a tremendous benefit to new farmers.
"Beginning farmers and ranchers and veterans will greatly benefit from this program, and a streamlined application process is of great value," said Johnson. "Access to credit is one of the greatest challenges that beginning farmers and ranchers face, and I commend the department for proposing a common-sense way to help alleviate the problem," Johnson said.
Producers interested in applying for a microloan may contact their local Farm Service Agency office.