Farm Service Agency creates microloan progam for beginning, niche and small family farms

Microloans provide access for up to $35,000 in financing for start-up and small family farms.

Michigan State University Extension farm management educators receive numerous requests for information for funding sources such as grants or low interest loans for small or beginning farmers. The USDA Farm Service Agency has created the Microloan Program as one tool to fill that niche.

Use of microloans

Loan funds can be used for all approved operating expenses as authorized by the program. These include, but are not limited to; initial start-up expenses, crop inputs such as fertilizer, seed, land rent, purchase of livestock, equipment, water wells, hoop houses or irrigation.

 Application process

Applicants who do not have traditional farm experience or have not been raised on a farm can qualify, but will need some farm management experience. This can include other small business experience or apprenticeship training. Applicants can gain farm management experience while working with a mentor during the first production and marketing cycle.

Security requirements

Microloans must be secured by a first lien on at least 100 percent of the loan amount. The security can be the farm property or the agricultural products produced.

Rates and terms

Eligible applicants may obtain up to $35,000. The repayment period will vary, but cannot exceed seven years. Annual operating loans are repaid within 12 months of when the agricultural commodities produced are sold. Interest rates are based on regular operating loan rates and are 1.375 percent at the time this article was written.

Contact a local Farm Service Agency office or visit for more information.

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