Rural Community Building

New Microloan Proposal Helps Small Farmers Avoid High-Interest Credit Card and Personal Loans

Agriculture Secretary Tom Vilsack recently announced that the U.S. Department of Agriculture is seeking comments on a new microloan program, Microloan Operating Loan Program, to help small and family operations progress through their start-up years with needed resources, while building capacity, increasing equity, and eventually graduating to commercial credit. Under the microloan proposal, producers who need a loan for less than $35,000 may apply using simplified and streamlined procedures. The program will cut the required paperwork in half and simplify the process to obtain a loan.

Naomi Scanlon of Clough Tavern Farm (NH) with Boer goat

The goal of the microloan program is to better meet the credit needs of small farm operations while making more effective use of FSA resources. 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. The improvements aim to offer a more efficient processing time for smaller loans, adding flexibility to some of the eligibility requirements and reducing the application requirements.

USDA farm loans can be used to purchase land, livestock, equipment, feed, seed, and supplies, or to construct buildings or make farm improvements. For beginning farmers and ranchers, USDA provides affordable credit, including loans under the Beginning Farmer and Rancher Program and Youth Loans. In addition, USDA provides grants under the Beginning Farmer and Rancher Development Program to fund training programs. The establishment of a coordinating office for USDA beginning farmer programs has supported education and training for more than 15,000 beginning farmers and ranchers.

The proposed rule may be viewed at http://www.fsa.usda.gov/FSA/federalNotices?area=home&subject=lare&topic=frd-pi or through the FSA home page at http://www.fsa.usda.gov. Comments should be submitted no later than July 23, 2012 by either of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments.

• Mail: Director, Loan Making Division (LMD), FSA, USDA, 1400 Independence Avenue, SW, Stop 0522, Washington, DC 20250-0522.