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Beginning, even youth, farmers may apply for USDA microloans
Michigan Correspondent

MEMPHIS, Tenn. — The USDA has announced a new microloan program designed to help beginning farmers as well as disadvantaged farmers and other individuals either expand their operations or get a leg up in the business.

“This program will indeed provide credit through our Farm Service Agency (FSA) network,” said USDA Secretary Tom Vilsack on Jan. 15. “It will provide credit in a reduced time process, in that we will be reducing the forms that have to be filled out.”

Currently, 17 forms have to be filled out for USDA loan applications; for the new microloan, only seven forms will be needed. Also, normally, USDA requires three years of documented business history on the part of the applicant, but Vilsack said for this new program it will only require the most recent operating year history for the producer.

The loan can be for up to $35,000 a year for up to seven years. “It can be used in a very flexible way,” he said. “We’re excited about this flexibility and excited about this streamlined process and hope that this is a successful program for the USDA.”

Two of the target groups for the new loan program are current 4-H and FFA members. “We hope that this will be a step up for a number of these youngsters,” Vilsack said. “We also know there’s a number of returning veterans that are interested in getting into a farming operation. We hope that this will be made available to our returning veterans if they’re interested.”

He explained many veterans returning from Iraq and Afghanistan are from rural communities and some are interested in the possibility of farming. He also said in recent years there has been increased loan activity at FSA for beginning farmers, and “we hope to continue that.”

Vilsack stated he’s met several small and beginning farmers, returning veterans and disadvantaged producers interested in careers in farming, who often must rely on credit cards or personal loans with high interest rates to finance their startup operations. The current rate for the new program is 4.9 percent.

He said this is slightly higher than the current rate for disaster assistance loans. “It’s a very competitive rate,” he said.
According to the USDA, in developing the microloan program the FSA evaluated the needs of smaller farm operations and “any unintended barriers to obtaining financing.” It also stated the program should help those who want to grow niche crops or sell directly to ethnic markets and farmers’ markets.

Also, for those who have in the past received Rural Youth Loans, the microloan program is meant to provide a bridge to transition successfully to larger-scale operations.

Money from the loans can be used to pay for startup expenses, including hoop houses, essential tools, irrigation and delivery vehicles, as well as annual expenses including 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,” the USDA stated.

Such loans can be used to buy land, livestock, equipment, feed, seed and supplies, or for the construction of buildings or farm improvements. Those who are interested in applying for a loan through the new microloan program should contact their local FSA office.

More details on the program are available on the Federal Register, published as a final rule on Jan. 17 online at under the “Farm Service Agency” heading.
Tomorrow (Jan. 31), the Illinois Farm to School initiative will hold a free online seminar on the USDA microloans. Jeffrey E. Koch, farm loan chief from the Illinois FSA, will explain the new microloans and other funding options available for growers interested in selling to schools and other wholesale markets. The session can be accessed with a home computer. The webinar will be at 3 p.m. Central time. There is no fee, but registration is required. To register, go to https://webs.extension.
For further information on the webinar, contact Julia Govis at 630-955-1150 or email