Agricultural Microloan Program

The MDA's Rural Finance Authority (RFA) established the Agricultural Microloan Program to provide working capital and credit for emerging and specialty farmers. The program's focus is to assist non-traditional farmers in the transition from their current situation to one where operators qualify for traditional avenues of agricultural credit.

Farmers can borrow up to $20,000 to be used for:

• Annual inputs like seed, feed, and fertilizer

• Land rent and other annual expenses

• Equipment and other farm assets with a common useful life of 10 years or less

Not eligible: land/real estate, cooperative stock, and refinancing of current debts.

Loans are made through intermediary lenders, who serve as lending agent and local support person for the farmer.

To be eligible for the Agricultural Microloan Program, applicants must:

• Be a Minnesota resident

• Be a member of a protected group as defined under Minn. Stat. § 43A.02, subd. 33 (racial minority, woman, person with disabilities) or a qualified non-citizen as defined under Minn. Stat. § 256B.06, subd. 4, par. (b) (refugee, immigrant, asylum)

• Raise specialty crops (fruits, vegetables, herbs, and cut flowers) or eligible livestock (open range poultry, sheep, goats)

• Show an ability to repay the loan

The program FAQ adds that applicants must be a current or potential farmer and must have a documented business plan, including a viable cashflow projection and marketing plan.

• Maximum loan principal is $20,000. The program FAQ states applicants can access up to $20,000 per operation, or 70% of annual produce value, whichever is less.

• The interest rate is determined by the lender but cannot exceed 10%.

• Loan term of 1 to 6 years, negotiated between the lender, applicant, and the RFA.

• Loans may contain prepayment penalties under limited circumstances.

• Other common fees are negotiated with the intermediary lender.

• The borrower must satisfy the local lender's guidelines. The local lender controls the day-to-day operation of the loan.

Interest rates and other specific terms vary from lender to lender depending on the conditions of the loan.

Complete the RFA Microloan Borrower Application (available in English, Spanish, French, Hmong, Kiswahili, and Somali) and submit it through an approved intermediary lender. Current approved lenders are:

• Compeer Financial (statewide) - Sai Thao, 952-597-4086, sai.thao@compeer.com

• Latino Economic Development Center / Centro para el Desarrollo Económico Latino (Twin Cities, Long Prairie area) - Andrés Salinas, 612-724-5332, andres@ledcmn.org

• United FCS (Chippewa, Kandiyohi, Lac qui Parle, Lincoln, Lyon, Meeker, Redwood, Renville, Swift, Yellow Medicine counties) - Lyn Voigt, Litchfield Office, 320-693-7953; Scott Anderson, Marshall Office, 507-532-5751

Any lending institution (non-profit or for-profit) in good standing with the State of Minnesota, with the appropriate business structure and suitable staffing to distribute and collect loan funds, may volunteer to become an Intermediary Lender with the RFA Microloan Program using the RFA Microloan Lender Application.

Program questions: Minnesota Rural Finance Authority, 625 Robert St North, St. Paul, MN 55155-2538, 651-201-6004, RFA.Loans@state.mn.us.

• Frequently Asked Questions: https://www.mda.state.mn.us/pilot-agricultural-microloan-program-frequently-asked-questions

• RFA Microloan Lender Application (PDF): https://www.mda.state.mn.us/sites/default/files/2018-07/ag03235microloanx.pdf

• Borrower application translations: Spanish https://www.mda.state.mn.us/sites/default/files/docs/2023-07/AG03236%20Borrower%20Application%20Pilot%20Ag%20Microloan%20Program_ES_Final.pdf ; French https://www.mda.state.mn.us/sites/default/files/docs/2023-07/AG03236%20Borrower%20Application%20Pilot%20Ag%20Microloan%20Program_FR_Final.pdf ; Hmong https://www.mda.state.mn.us/sites/default/files/docs/2023-07/AG03236%20Borrower%20Application%20Pilot%20Ag%20Microloan%20Program_HMV_Final.pdf ; Kiswahili https://www.mda.state.mn.us/sites/default/files/docs/2023-07/AG03236%20Borrower%20Application%20Pilot%20Ag%20Microloan%20Program_SW_Final.pdf ; Somali https://www.mda.state.mn.us/sites/default/files/docs/2023-07/AG03236%20Borrower%20Application%20Pilot%20Ag%20Microloan%20Program_SO_Final.pdf