As a beginning farmer, niche producer or small family farm, you may have more options to finding funds than the traditional outlets for a farm loan. Microloans, offered by the Farm Service Agency, may be just what you need to get your business started.
What is a microloan?
The Farm Service Agency (FSA) developed the microloan program to better serve the operating needs of beginning, niche and the smallest of family farm operations.
The program offers more flexible access to credit and an alternative loan for smaller farming operations like specialty crop producers.
What can they be used for?
Microloans can be used for: initial start-up expenses; annual expenses such as seed, fertilizer, utilities and land rents; marketing expenses; family living expenses; purchase of livestock, equipment, or other materials essential to the operation; minor farm improvements; hoop houses; irrigation; and delivery vehicles.
How much can I qualify for?
Eligible applicants can receive microloans for up to $50,000 with repayment terms not exceeding seven years. Annual operating loans are repaid in 12 months or when the agricultural commodities produced are sold. Interest rates are based on regular operating loan rates and are in effect at the time of microloan approval.
Where can I sign up?
FSA microloans applications can be obtained from a local FSA office or downloaded from the USDA website. Completed applications should be submitted to a local FSA office for review.
Source: USDA Farm Service Agency, Farm Loans, 2014 Farm Bill Fact Sheet
(Farm and Dairy is featuring a series of “101” columns throughout the year to help young and beginning farmers master farm living. From finances to management to machinery repair and animal care, farmers do it all.)
More Farming 101 columns:
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- The farm balance sheet
- 5 items for your farm’s cash flow statement
- Personal and business records: Keep them separate
- What to include in your farm business plan
- How to approach a lender: Tips for getting a farm loan
- Saving for the future: 6 tips for young farmers
- How to create a farm safety kit
- 5 tips for child safety on the farm
- 6 tips for livestock safety
- 4 tips for transporting livestock
- 5 ways to better understand tractor stability
- 6 farm equipment hacks
Another good option for farmers is Kiva microloans. We make 0% interest loans up to $10,000, which can be paid back over 3 years. We do not ask for collateral or pages and pages of financial statements — because we make lending decisions based on the strength of a borrower’s character, rather than their credit score. The unique part of the Kiva model is the crowdfunding component — much more than money, Kiva loans provide borrowers with a community of hundreds of supporters, advisors and even potential customers.