USDA Microloans Available for Small Farms

by | Apr 25, 2014 | Economics, General Agriculture

The Microloan Program, available through USDA’s Farm Service Agency (FSA), is a relatively new option to help beginning farmers get started, or to assist existing small farms expand their operations. This program offers more flexible access to credit and is an attractive loan alternative for smaller farming operations, including the non-traditional, which often encounter limited financing options.

Jackson Farmer's Market

Microloans from USDA can provide up to $50,000 to help start new farm enterprises. Photo credit: Doug Mayo

Farmers may borrow up to $50,000 with limited collateral requirements and have up to seven years for repayment. The interest rate on this program varies from year to year, but is currently two percent.

Standard FSA Operating Loans require a minimum of three years of experience. With this microloan program less than three years of experience is needed and an agreement to work with a mentor can be substituted to meet the basic loan requirements.

USDA has also streamlined the application and business plan requirements for these microloans. The simpler applications are also quicker for FSA personnel to process, with responses provided within one to two weeks from the time of application submission.

The $50,000 available will supply enough capital liquidity to help start a farming operation. Whether it is for beginning bee keepers, farmer’s market vegetable operations, or a small breeding herd of livestock, microloans may provide the novice farmer enough money to start a business.

A successful farmer who has repaid the loan will have gained experience and equity which may be used to qualify for the larger, more traditional agricultural operating loans available through FSA and commercial lenders.

Microloans can be used for, but not limited to:

  • Initial start-up expenses

  • Annual expenses such as seed, fertilizer, utilities, land rents

  • Marketing and distribution expenses

  • Family living expenses

  • Purchase of livestock

  • Materials essential to farm operations

  • Minor farm improvements such as wells and coolers

  • Hoop houses to extend the growing season

  • Essential tools and equipment

  • Irrigation

  • Delivery vehicles

To learn more about USDA Microloans:

  1. Download the USDA FSA Microloan Fact Sheet

  2. Contact the FSA Farm Loan Manager that serves your county

  3. Download the Microloan Application Form

  4. Microloan Application Instructions

 

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