Agriculture Secretary Tom Vilsack this week announced a new microloan program from the U.S. Department of Agriculture (USDA) designed to help small and family operations as well as 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.
The final rule establishing the microloan program was published in the Jan. 17 issue of the Federal Register and is available at www.gpo.gov/fdsys/pkg/FR-2013-01-17/html/2013-00672.htm.
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 Farm Service Agency's (FSA) 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 FSA office.