News & Events

Microloans up to $35,000 aim to assist small farmers, veterans, and disadvantaged producers

Mar 31, 2013

Agriculture Secretary Tom Vilsack today announced a new microloan program from the U.S. Department of Agriculture (USDA) 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 needed resources and helping to increase equity so that farmers may eventually graduate to commercial credit and expand their operations. The microloan program will also provide a less burdensome, 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.”
>
> The new microloans, said Vilsack, represent how USDA continues to make
> year-over-year gains in expanding credit opportunities for minority,
> socially-disadvantaged and young and 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
> percent.
>
> Administered through USDA’s Farm Service Agency (FSA) Operating Loan
> Program, the new microloan program offers credit options and solutions to a
> variety of producers. FSA has a long history of providing agricultural
> credit to the nation’s farmers and ranchers through its Operating Loan
> Program. 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. For past FSA Rural
> Youth Loan recipients, the microloan program provides a bridge to
> successfully transition to larger-scale operations.
>
> Since 2009, USDA has made a record amount of farm
> loans

through
> FSA-more than 128,000 loans totaling nearly $18 billion. USDA has increased
> the number of loans to beginning farmers and ranchers from 11,000 loans in
> 2008 to 15,000 loans in 2011. More than 40 percent of USDA’s farm loans now
> go to beginning farmers. In addition, USDA has increased its lending to
> socially-disadvantaged producers by nearly 50 percent since 2008.
>
> 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 be to construct buildings or make farm improvements.
> Small farmers often rely on credit cards or personal loans, which carry high
> interest rates and have less flexible payment schedules, to finance their
> operations. Expanding access to credit, USDA’s microloan will provide a
> simple and flexible loan process for small operations.
>
> Producers interested in applying for a microloan may contact their local
> Farm Service Agency
> office

.
>
> The Obama Administration, with Agriculture Secretary Vilsack’s leadership,
> has worked tirelessly to strengthen rural America, maintain a strong farm
> safety net, and create opportunities for America’s farmers and ranchers.
> U.S. agriculture is currently experiencing one of its most productive
> periods in American history thanks to the productivity, resiliency, and
> resourcefulness of our producers.