Group Responds to FSA Microloan Program

Last week's move by USDA heralded as an advance by the National Sustainable Agriculture Coalition.

Published on: Jan 22, 2013

Last week, USDA announced the start of a new loan program to expand credit options for small farms of all types, especially young farmers and those serving local and regional food markets, including urban farmers. The move got positive response from the National Sustainable Agriculture Coalition.

"NSAC commends the Farm Service Agency for moving ahead with an innovative new microloan program that will allow USDA to better meet the credit needs of young and beginning family farmers who often face difficulty in obtaining commercial credit at the start of their new careers," says Juli Obudzinski, NSAC Policy Associate. 

"This new program will provide young and beginning farmers with capital to jump start their farm operations and help grow the next generation of farmers.  We are also excited that these new microloans will also be available to finance the initial credit needs of the new wave of young farmers selling to local and regional markets, and will further expand the growth of local and regional food systems."

Last weeks move by USDA heralded as an advance by the National Sustainable Agriculture Coalition.
Last week's move by USDA heralded as an advance by the National Sustainable Agriculture Coalition.

These new microloans will be funded through USDA's Farm Service Agency's existing Direct Operating Loan program, and will have a maximum loan amount of $35,000, which is much lower than the $300,000 loan cap for regular FSA farm operating loans.  These smaller loans are intended to cover smaller purchases, such as seeds, animals, small equipment, or other investments that young and other beginning farmers require to finance their operations.  The new microloan program will feature a simplified and streamlined application process, and will require less paperwork for farmers to fill out and appropriately reflects the smaller loan amount. 

The final rule for the proposed microloan program was published today, and the Farm Service Agency, which is USDA's credit lending arm, intends to begin making these smaller loans effective immediately.

NSAC and several member organizations, including the National Young Farmers Coalition, California FarmLink, and others, spearheaded initial efforts to encourage USDA to develop a more streamlined loan program that specifically targets smaller and less-established producers who typically have smaller credit needs. We continue to be big supporters of the FSA credit programs for family farms in general and for beginning farmers and socially disadvantaged farmers in particular.  The new microloan program helps fill an additional, important niche within the overall FSA loan portfolio.

We are very pleased with USDA's responsiveness and with the new lending option.  We also continue to pursue further improvements through the farm bill process in Congress.

NSAC published a blog with more details at here