Microloan Programs

The focus of Microloans is on the financing needs of small, beginning farmer, niche and non-traditional farm operations, such as truck farms, farms participating in direct marketing and sales such as farmers’ markets, CSA’s (Community Supported Agriculture), restaurants and grocery stores, or those using hydroponic, aquaponic, organic and vertical growing methods.

Direct farm ownership microloans:

• Make a down payment on a farm

• Build, repair, or improve farm buildings, service buildings, farm dwelling

• Soil and water conservation projects

• May be used as a downpayment farm ownership loan

• May be used in joint financing

Direct farm operating microloans:

• Essential tools

• Fencing and trellising

• Hoop houses

• Bees and bee equipment

• Milking and pasteurization equipment

• Maple sugar shack and processing equipment

• Livestock, seed, fertilizer, utilities, land rents, family living expenses, and other materials essential to the operation

• Irrigation

• GAP (Good Agricultural Practices), GHP (Good Handling Practices), and organic certification costs

• Marketing and distribution costs, including those associated with selling through farmers' markets and community supported agriculture operations

• Pay for qualifying OSHA compliance standards (federal or state)

As with the regular Operating loan program, traditional and non-traditional family farms and ranches may be eligible for Microloan financing.

General eligibility requirements include:

• Must not have Federal or State conviction(s) for planting, cultivating, growing, producing, harvesting, storing, trafficking, or possession of controlled substances

• Have the legal capacity to incur the loan obligation

• Be able to show an acceptable credit history

• Is a citizen, non-citizen national or legal resident alien of the United States, including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and certain former Pacific Trust Territories

• Have no previous debt forgiveness by the Agency, including a guarantee loan loss payment

• Be unable to obtain sufficient credit elsewhere, with or without an FSA loan guarantee

• Not be delinquent on any Federal debt, other than IRS tax debt, at the time of loan closing

• Not be ineligible due to disqualification resulting from Federal Crop Insurance violation

Microloan versus FSA's "regular" loan:

Direct Farm Ownership Microloans:

• No appraisal needed

• Verification of non-farm income unnecessary unless required for repayment

• Successful repayment of an FSA Youth loan may be used towards the required 3 years of management experience

Direct Farm Operating Microloans:

• The Microloan program allows for situations where production yield history or reporting is impractical, not relevant to the proposal submitted, or is not available.

• Modified farm managerial experience requirements accommodate smaller farm operations, beginning farmers, and those with no farm management experience. Small business experience plus any farm experience, along with a self-guided apprenticeship, is a way to meet the farm management requirement.

• Rural Youth loan recipients with a successful repayment history, or youth who have participated in an agriculture-related organization, can meet the modified managerial ability requirements with those experiences.

For the direct ownership microloan, the maximum term is 25 years.

For the direct operating microloan, the repayment period will vary depending upon the purpose of the loan. General operating and family living expenses are due within 12 months or when the agricultural commodities sell. For larger purchases such as equipment or livestock, the term will not exceed 7 years.

• Application Instructions

• Fact Sheet: Microloans

• Direct Loan Making Handbook 3-FLP

• Farm Answers Library

• National Agrability Project

• National Organic Program

• Natural Resources and Conservation Service Resources for Small Farms

• USDA Information for Veterans

• Farmers.gov