USDA finalizes new microloan program
A new microloan program has been started by the U.S. Department of Agriculture in an effort to make loans of under $35,000 accessible to beginning or socially disadvantaged farmers or those with small and family operations.
The program will assist those farmers in a number of ways. First, it will given them a boost to their progress during their start-up years by providing resources and increasing equity while avoiding high interest rates and inflexible payment schedules. Second, it will provide access to an application process simpler than that found with more traditional loans. Next, farmers looking to produce niche crops for ethnic markets and farmers markets can use the program to obtain financing. Also, those farmers who have previously taken out Farm Service Agency Rural Youth Loans can use the program to transition to larger-scale operations.
Funds from these loans can be applied to a variety of expenses, such as: start-up costs (hoop houses, tools, irrigation equipment, delivery vehicles); annual expenses (feed, fertilizer, utilities, land rents, marketing, and distribution costs); land; livestock; farm improvements; and the construction of buildings.
In addition to all of these benefits, producers can, down the line, apply for operating loan ($300,000 maximum) or use the Farm Service Agency’s Guaranteed Loan Program to procure financing from a commercial lender.
Farmers interested in filling out an microloan application may do so at their local Farm Service Agency office. As of Feb. 1, the interest rate for these microloans (which changes monthly) was 1.25 percent.