FSA’s New Microloan Program

I’m sure you have heard about the Farm Service Agency’s new microloan program but nonetheless, since a few months have passed since the announcement, now may be a good time for a reminder about the program.

As background, FSA devotes a percentage of its resources to assisting beginning and socially disadvantaged farmers.  As a result, the microloan program may be one in which beginning farmers are interested for the reasons detailed below and the FSA will be able to assist.

As you may or may not know, the FSA can now provide “microloans”, which were developed to for beginning, small, and niche farming operations.  The loans are for up to $35,000 payable over seven years.  While the microloan program requires farm management experience, the requirement is flexible.  This can be met by prior farming experience, apprenticeship, or past participation in organizations such as 4-H, Future Farmers of America, beginning farmer programs, and community-based organizations.  Further, small business experience along with a self-directed apprenticeship can allow a person to start farming with a microloan.

What may the loans be used for?  Examples include initial start-up expenses, direct marketing to restaurants and grocery stores, organic production, farmers markets and/or community supported agriculture, purchase of breeding livestock, delivery vehicles, annual expenses such as feed, fertilizer, and/or land rent, and minor farm improvements.  Importantly, microloans may also be used for family living expenses.  These are only examples, however; other expenses and needs may also be funded through microloans.

The microloans provide a bridge between the FSA Youth Loans and more traditional loans for larger-scale production.  As a result, the paperwork and application process is streamlined and simplified for a microloan than traditional operating loan from the FSA.  Most importantly, an itemized cash flow budget are not required for the microloan.

What is the catch?  Frankly, I cannot think of any.  For small and beginning farmers, the microloan program is an opportunity to finance your operation in a small, managed way.

The FSA’s FactSheet is here and provides guidance.  Go here to locate your local FSA office or here to access the microloan forms.

As always, if you have any questions or need assistance, feel free to contact Legal Aid of Nebraska online or at 866-660-1391.