The U.S. Department of Agriculture on Tuesday announced details of a new microloan program that will provide financing up to $35,000 for small farmers, veterans and so-called socially disadvantaged producers.
Agriculture Secretary Tom Vilsack said the microloan program is aimed at supporting the progress of producers through their startup years by providing needed resources and helping to increase equity so farmers eventually may graduate to commercial credit and expand their operations.
The new program also will have a less burdensome, more simplified application process than what is required for traditional farm loans, Vilsacká said.
"I have met several small and beginning farmers, returning veterans and disadvantaged producers interested in careers in farming who too often must rely on credit cards or personal loans with high interest rates to finance their start-up operations," Vilsack said.
The USDA Farm Service Agency defines socially disadvantaged producers as including women, blacks and Native Americans, among other groups.
The microloans will be administered through the USDA's Farm Service Agency Operating Loan Program. In assessing its programs, FSA evaluated the needs of smaller farm operations and any unintended barriers to obtaining financing.
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 FSA's Guaranteed Loan Program.
View the USDA's microloan website at http://smgs.us/3i74.
USDA has increased the number of loans to beginning farmers and ranchers from 11,000 loans in 2008 to 15,000 loans in 2011. More than 40 percent of the agency's farm loans now go to beginning farmers.The USDA has increased its lending to socially-disadvantaged producers by nearly 50 percent since 2008.