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New loans for young, beginning farmers

If you're just starting out on your farm, or looking for a way to get into the business, there's a new USDA program that you may want to know about.

The USDA Farm Service Agency (FSA) has developed a Microloan (ML) program to "better serve the unique financial operating needs of beginning, niche and the smallest of family farm operations" in the form of operating loans of up to $35,000 per selected eligible applicant. The loans, according to a USDA document, can be used for:

  • Initial start-up expenses
  • Annual expenses such as seed, fertilizer, utilities, land rents
  • Marketing and distribution expenses
  • Family living expenses
  • Purchase of livestock, equipment, and other materials essential to farm operations
  • Minor farm improvements such as wells and coolers
  • Hoop houses to extend the growing season
  • Essential tools
  • Irrigation
  • Delivery vehicles.

The program, says Ohio State University Extension Educator David Marrison, can either be a one-time startup funding source or a way for a young farmer looking to grow his or her operation to transition into more traditional USDA operating loan programs.

"Farms seeking a smaller loan for start-up or operational now have a new source of revenue. The loan features a streamlined application process built to fit the needs of new and smaller producers," he says. "The new micro-loan 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 more traditional commercial loans."

Also unique to this microloan program is a different set of requirements, taking the experience -- or lack thereof -- of younger or nontraditional farmers into account.

"The repayment term for the loans may vary and will not exceed seven years. Annual operating loans are repaid within 12 months or when the agricultural commodities produced are sold," Marrison says. "Requirements for managerial experience and loan security have been modified to accommodate smaller farm operations, beginning farmers and those with no farm management experience."

Officials recommend farmers interested in applying for a USDA-FSA microloan contact their local FSA office.

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