Ag Secretary Tom Vilsack announced the new program at the Agricenter International in Memphis, Tenn., last week.
Vilsack says the program is designed to expand credit access to small and beginning farmers, returning veterans and disadvantaged producers interested in farming. "The microloan program fills a niche for people who may not have as much of a history in farming, but want access to credit to be able to farm," Vilsack says.
The final rule establishing the microloan program will be published in the Jan. 17 issue of the Federal Register. The interest rate for USDA's new microloan product changes monthly and is currently 1.25 percent. The repayment term is up to seven years. "This program offers small, beginning and disadvantaged farmers flexibility in what they can use the loan for," Vilsack says.
For example, the microloan program is ideal for small farmers. "I could see this program being ideal for a farmer who wanted to purchase a tractor in order to grow five acres of pumpkins," Vilsack says.
Administered through USDA's Farm Service Agency (FSA) Operating Loan Program, the new microloan program offers credit options and solutions to a variety of producers. FSA has a long history of providing agricultural credit to the nation's farmers and ranchers through its Operating Loan Program. In assessing its programs, FSA evaluated the needs of smaller farm operations and any unintended barriers to obtaining financing. For beginning farmers and ranchers, for instance, the new microloan program offers a simplified loan application process. In addition, for those who want to grow niche crops to sell directly to ethnic markets and farmers markets, the microloan program offers a path to obtain financing. For past FSA Rural Youth Loan recipients, the microloan program provides a bridge to successfully transition to larger-scale operations.