A commentary by Warren Hanson, Acting State Executive Director.
Access to reliable credit was an important issue for farmers and ranchers long before President Woodrow Wilson signed the Federal Farm Loan Act in 1916. Even 100 years later, the cost and ease of access to land and equipment remains a challenge to those wanting to either begin or expand an agricultural operation.
At the U.S. Department of Agriculture Farm Service Agency (FSA), we believe starting or expanding a farm or ranch shouldn't be out of reach by requiring the purchase of thousands of acres of land, borrowing significant sums of money and suffering unnecessarily high interest rates.
In response, FSA created a new microloan program back in 2013. This program is tailored towards borrowers with smaller financing needs. With its streamlined paperwork, no mandatory minimums and a maximum of $50,000, microloans have become one of the FSA's most popular programs.
To-date, microloans have provided $25.8 million in loans to more than 17,000 borrowers. Of that, fully 70 percent of our microloans went to new farmers and nearly 50 percent to other first-time FSA borrowers.
The original 'farm operating microloans' can be used for operating expenses like; tools, equipment, livestock, seed, fertilizer, utilities — even marketing, distribution and organic certification expenditures.
However, unlike conventional FSA farm operating loans, the microloan has a simplified application process and modified eligibility requirements that better fit the needs of new and smaller operations.
Further, in January 2016 FSA expanded its microloan program to cover farm ownership expenses, including; land purchases, construction or upgrade of farm structures, and implemention of soil and water conservation practices.
With a farm ownership microloan, no appraisals are needed and eligibility can more easily be met by demonstrating other (non-farm) business experience, military leadership, and advanced education in an agricultural field.
So, if you operate a truck farm with direct marketing and sales, if your farm uses hydroponics, aquaponics, organic or vertical growing methods, if you work a smaller number of acres and do business with farmers markets, restaurants or community-supported agriculture businesses, perhaps a microloan can help you make your business succeed and grow!
At FSA, we work each day to help farmers and ranchers achieve their own version of the American Dream of brighter days for their farms, their families, and their future. To learn more about how microloans can help you, visit www.fsa.usda.gov/microloans or contact your local FSA office.
To find your local office, visit http://offices.usda.gov.