Agriculture Secretary Tom Vilsack unveiled a new microloan program this week that will expand access to credit for small farmers and ranchers and beginning and socially disadvantaged producers.
The microloan application process is simpler and requires less paperwork than traditional operating loans. Additionally, the requirement for managerial experience and loan security has been modified to ensure that small family operations and beginning farmers and ranchers can obtain the credit needed to start and continue an agricultural operation. This loan program will also be useful to specialty crop producers and operators of community supported agriculture (CSA).
Eligible applicants can apply for a maximum amount 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 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.
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. The microloan program will expand access to credit and provide a simple and flexible loan process for small operators.
The current interest rate for microloans is 1.25 percent.
In addition to microloans, FSA offers several farm loan programs that provide funding to purchase land, livestock, equipment, feed, seed, and supplies, or can be used to construct buildings or make farm improvements.
Producers interested in applying for a microloan or other FSA farm loan program should contact their local Farm Service Agency office.