New Microloans Expand Small Farm Finance Options
FSA to Help Beginning and Small Farmers
(TYLER, TX) Jan. 24, 2013— Smith County USDA Farm Service Agency (FSA) Farm Loan Officer Joseph Grier, announced that beginning farmers and ranchers in Texas now have a new Microloan credit option to consider. On Jan. 17, FSA started offering Microloans which are designed to help farmers and ranchers with credit needs of $35,000 or less. The loan features a streamlined application process built to fit the needs of beginning and the smallest of family farmers and ranchers.
“The microloan application process is simpler and requires less paperwork than traditional operating loans,” said Grier. “This loan program will also be useful to specialty crop producers and operators of community supported agriculture," he said.
In 2012, the Farm Service Agency provided $196.4 million in farm loan assistance to agricultural producers of all sizes in Texas. That year, operating loans accounted for the majority of the loans extended totaling $129.4 million, while farm ownership loans totaled more than $61 million. In 2012, $5.7 million in emergency loans were made to producers in Texas recovering from natural disasters.
“The current interest rate for Microloans is 1.25 percent and the maximum term for microloans is seven years,” according to Grier. “Producers can contact their local FSA farm loan office for details about the Microloan Program.”
Microloans can be used to pay for initial start-up expenses such as hoop houses to extend the growing season, essential tools, irrigation, delivery vehicles and annual expenses such as seed, fertilizer, utilities, land rents and marketing and distribution expenses. As financing needs increase, applicants can apply for an operating loan up to the maximum amount of $300,000 or obtain financing from a commercial lender under FSA's Guaranteed Loan Program.
In response to tighter financial markets, USDA has expanded the availability of farm credit, helping farmers obtain loans across the U.S. Since 2009, USDA has provided more than 128,000 loans to family farmers totaling more than $18 billion. In Texas, more than 70 percent of the loans went to beginning and socially disadvantaged farmers and ranchers.