Is an FSA microloan right for your farm?


Are you looking for a little extra capital to support your farming goals? USDA Farm Service Agency (FSA) microloans allow small farmers to apply for only what they need (no minimum) up to $50,000. Farmers can use the loans to purchase land, buy equipment, or for other farming expenses. 

 

EXAMPLES of purchases the loans may be used for: 


  • A down payment on farmland
  • Land rents and lease
  • Building a pack and wash station
  • Fertilizer, utilities, feeds, pesticides
  • Tractor or implements
  • Family living expenses
  • Seeds, livestock, compost, packaging materials
  • Irrigation fees
  • Hiring a farmhand
  • GAP (Good Agricultural Practices)
  • Fencing and trellising
  • GHP (Good Handling Practices)
  • Hoop houses
  • Organic Certification costs
  • Bees and bee equipment
  • For qualifying OSHA compliance standards (Federal or State)
  • Milking and pasteurization equipment
  • Marketing and distribution costs, including those associated with selling through farmers markets and Community supported agriculture (CSA) operations
  • Maple sugar shack and processing equipment

Farmers needing to purchase land and get help with operating expenses can combine an OWNERSHIP microloan with an OPERATING microloan and borrow up to $100,000. 

 


ELIGIBILITY

To be eligible for the microloan program farmers must operate a family farm–defined as having decision-making authority and being involved in daily operation, which may include contributing labor. 

Other eligibility requirements are you: 

  • Must be a U.S citizen or legal resident
  • Must be at least 18 years of age and able to make decisions about your own debt and finances
  • Must not have a federal or state level conviction that makes you ineligible for federal benefits
  • Must have a workable farm business plan
  • Must have a reasonable credit history
  • Must be unable to obtain credit elsewhere at reasonable rates and terms

 


Highlights of the microloan program compared to FSA ownership and operating loans

MicroLoan Farm Operating Regular Farm Operating Loan
Non-farm income only required if needed for repayment Required to verify non-farm income
Flexibility with production history requirement 3 year production history required
Operating loan repayment term 1-7 years Repayment term 1-7 years
Some farm management experience is required. Small business experience and agricultural internships and apprenticeship programs, even those that are self-guided, count toward meeting the farm management requirement. Opportunity to gain farm management experience while working with a mentor during the first production and marketing cycle. The level of management ability required will depend on the complexity of the operation and the loan request amount. Every application is evaluated on a case-by-case basis factoring in education, on-the-job training, and farm experience. 
Loan secured with 100% to 150% collateral in farm property or agriculture products Loan secured with at least 100% collateral in farm property
Application is 2 pages  Application is 28 pages
Maximum loan amount is $50,000 Maximum Loan amount is $400,000

 

Microloan Farm Ownership Regular Farm Ownership Loan
No appraisal needed Appraisal required
Option to substitute 1 year of business management, military service, or 16 hours of agriculture training to meet the 3 year farm management requirement 3 years farm management required for ownership loans 
Application is 2 pages; additional documents may be requested Application is 28 pages
Repayment term is 25 years Maximum term is 40 years 
Maximum loan amount is $50,000 Maximum loan amount is $600,000
Loan secured with 100% collateral in the farm, the real estate being purchased or improved. Microloans are exempted from the

requirements of obtaining 150% security and taking a lien on non-essential assets.

Loan secured with 100% to 150% collateral in the real estate being purchased or improved

*Interest rates are the same as regular program rates. As of August 2022, the interest rates for Operating Microloans is 4.00% and Ownership Microloans is 4.25%.  

To learn more about FSA microloans, ask questions, or get technical assistance, please contact Shakera by email at shakera@youngfarmers.org or call or text (518) 643-3564 x. 1.

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