The United States Department of Agriculture (USDA) has introduced a new microloan program that provides emerging farmers with the low-interest start-up capital they need to operate and grow their businesses.
“The new microloan 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 commercial credit and expand their operations,” according to a USDA press release.
Agriculture Secretary Tom Vilsack explains that those interested in a career in farming and starting an agricultural business often rely on high-interest credit cards or personal loans to finance their start-up operations.
The interest rate for the USDA microloan program is currently 1.25%, though the percentage changes monthly. Applications should check with their local Farm Service Agency office for the most current rate.
“By further expanding access to credit to those just starting to put down roots in farming, USDA continues to help grow a new generation of farmers, while ensuring the strength of an American agriculture sector that drives our economy, creates jobs, and provides the most secure and affordable food supply in the world,” Vilsack said.
New farmers can apply for up to $35,000 to pay for initial start-up expenses such as hoop houses, essential tools, irrigation and delivery vehicles. Annual expenses including seed, fertilizer, utilities, land rents, marketing and distribution expenses are also eligible for coverage.
“As their financing needs increase,” the press release states, “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.”
The microloan repayment terms vary, though none exceed seven years. Annual operating loans must be repaid within 12 months or when the farmer’s products are sold.
A downloadable PDF Fact Sheet provides additional details on eligibility requirements and the application process; emerging farmers interested in applying for a microloan may contact their local Farm Service Agency office to discuss their options.
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Images by: Jason Houston