By Ros Krasny
WASHINGTON, Jan 15 (Reuters) – The U.S. Department of
Agriculture announced a new program on Tuesday to help small
farming operations, including those run by minority or socially
disadvantaged farmers, improve their access to credit.
The program, administered through USDA’s Farm Service
Agency, will offer various loans of up to $35,000 for terms of
up to seven years to help recipients deal with farming’s often
prohibitive start-up costs.
“History tells us micro loans in combination with technical
assistance often results in a successful operation,” USDA
Secretary Tom Vilsack told reporters on a conference call.
The program will require less paperwork than traditional
USDA loans to farmers and ranchers – a mere eight forms to fill
out instead of 17 and the provision of one year of records
instead of three years.
“We hope this will be the next step up for those young
people” who might be interested in agriculture, but have
struggled with funding, Vilsack said.
USDA also cited returning veterans as among those who might
want to give farming a try, but currently struggle with funding.
“Small farmers often rely on credit cards or personal loans,
which carry high interest rates and have less flexible payment
schedules, to finance their operations,” USDA said.
The final rule establishing the program will be published on
Jan. 17 in the Federal Register.
Producers can apply for loans to pay for start-up expenses
such as essential tools, irrigation, delivery vehicles and
recurring expenses such as seed, fertilizer, rent and
distribution expenses.
The agency anticipates that some applicants will graduate to
operating loans up to $300,000 or obtain financing from a
commercial lender under the Farm Service Agency’s guaranteed
loan program.
Those larger loans can be used for a variety of purposes,
including buying land and livestock.
The National Farmers Union, a group that represents mostly
family farmers and ranchers, applauded the program.
“Access to credit is one of the greatest challenges that
beginning farmers and ranchers face,” said NFU President Roger
Johnson.
