Microloan Programs

Link

https://www.fsa.usda.gov/programs-and-services/farm-loan-programs/microloans/index

Additional Links

Fact Sheet

Deadline

Applications accepted on an ongoing basis

Sponsoring Organization

USDA Farm Service Agency (FSA)

Purpose

Provides microloans to individuals operating small, beginning, niche, and non-traditional farms. Includes farm operations such as truck farms, hydroponic, aquaponic, and organic producers, as well as direct marketing and sales through farmer's markets, community-supported agriculture, restaurants, and grocery stores. Helps applicants finance normal farm operations, purchase land and capital, and cover other costs necessary to begin and sustain productive and viable farm operations.

The program offers two types of microloans.

  1. Direct Farm Ownership Microloans may be used for the following purposes:
    • Make a down payment on a farm
    • Build, repair, or improve farm or service buildings and farm dwellings
    • Soil and water conservation projects
    • Down Payment Farm Ownership Loan
    • Joint financing
  2. Direct Farm Operating Microloans may be used for the following purposes:
    • Essential tools
    • Fencing and trellising
    • Hoop houses
    • Bees and bee equipment
    • Milking and pasteurization equipment
    • Maple sugar shack and processing equipment
    • Livestock, seed, fertilizer
    • Land rents, utilities, and family living expenses
    • Irrigation
    • Other materials essential to farm operations
    • Costs for good agricultural practices (GAP), good handling practices (GHP), and organic certifications
    • Marketing and distribution costs, including those for farmers markets and community-supported agriculture (CSAs)
    • Costs of qualifying Occupational Safety and Health Administration (OSHA) federal or state compliance standards

Amount of Funding

Loan amounts of up to $50,000 are available. Interest rates for Direct Farm Ownership Microloans and Direct Operating Microloans are posted the 1st of each month on the USDA FSA farm loan programs website at the bottom of the page.

The maximum loan term for a Direct Ownership Microloan is 25 years. Repayment periods for Direct Operating Microloans will vary based upon the purpose of the loan. The maximum term for larger purchases, such as equipment or livestock, is 7 years. Loans for general operating and family living expenses must be repaid within 12 months or when the agricultural commodities sell.

Direct Ownership Microloans can be secured by only the real estate being purchase or improved, as long as it meets the 100% security requirement. Direct Operating Microloans must be secured by a lien on farm property or agricultural products. Liens must hold a value of at least 100% of the loan amount, and up to 150% of the loan amount is required, if available, on loans made for annual operating purposes.

Who Can Apply

In order to be eligible for a microloan, applicants must meet the following general criteria:

  • Must not have federal or state convictions for planting, cultivating, growing, producing, harvesting, storing, trafficking, or possession of controlled substances
  • Have the legal capacity to incur the loan obligation
  • Must show an acceptable credit history
  • Be a U.S. citizen, non-citizen national, or legal resident alien
  • Have no previous debt forgiveness from USDA FSA, including a guarantee loan loss payment
  • Be unable to obtain sufficient credit from another source, with or without an FSA loan guarantee
  • Have no delinquencies 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

Additional requirements for Direct Farm Ownership applicants:

  • Must have at least 3 years of farm management experience within 10 years prior to the application date
  • May substitute 1 year of farm management experience with one of the following:
    • 16 credit hours of post-secondary education in an agriculture related field
    • 1 year of direct business management experience
    • Military leadership or management from completing an acceptable military leadership course
    • Successful repayment of an FSA Youth loan

Additional requirements for Direct Farm Operating applicants:

  • Must have some farm experience
  • May use small business experience, agricultural internships, and apprenticeship programs to meet the farm experience requirement
  • May work with a mentor during the first production and marketing cycle if the applicant has minimal farm experience
  • Do not need to have previously produced farm income

Geographic Coverage

Nationwide

What This Program Funds

Buildings and Facilities • Capacity Building • Equipment • Operating Costs and Staffing • Starting a Business

Application Process

Application instructions, requirements, and other information can be found on the program website.

Application form
Guide to FSA Farm Loans

Contact

For program questions:
Contact the appropriate USDA Farm Service Agency state office.

Topics This Program Addresses

Economic Development