Is an FSA microloan right for your farm?
Are you looking for a little extra capital to support your farming goals? USDA Farm Service Agency (FSA) microloans allow small farmers to apply for only what they need (no minimum) up to $50,000. Farmers can use the loans to purchase land, buy equipment, or for other farming expenses.
EXAMPLES of purchases the loans may be used for:
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Farmers needing to purchase land and get help with operating expenses can combine an OWNERSHIP microloan with an OPERATING microloan and borrow up to $100,000.
ELIGIBILITY
To be eligible for the microloan program farmers must operate a family farm–defined as having decision-making authority and being involved in daily operation, which may include contributing labor.
Other eligibility requirements are you:
- Must be a U.S citizen or legal resident
- Must be at least 18 years of age and able to make decisions about your own debt and finances
- Must not have a federal or state level conviction that makes you ineligible for federal benefits
- Must have a workable farm business plan
- Must have a reasonable credit history
- Must be unable to obtain credit elsewhere at reasonable rates and terms
Highlights of the microloan program compared to FSA ownership and operating loans :
| MicroLoan Farm Operating | Regular Farm Operating Loan |
| Non-farm income only required if needed for repayment | Required to verify non-farm income |
| Flexibility with production history requirement | 3 year production history required |
| Operating loan repayment term 1-7 years | Repayment term 1-7 years |
| Some farm management experience is required. Small business experience and agricultural internships and apprenticeship programs, even those that are self-guided, count toward meeting the farm management requirement. Opportunity to gain farm management experience while working with a mentor during the first production and marketing cycle. | The level of management ability required will depend on the complexity of the operation and the loan request amount. Every application is evaluated on a case-by-case basis factoring in education, on-the-job training, and farm experience. |
| Loan secured with 100% to 150% collateral in farm property or agriculture products | Loan secured with at least 100% collateral in farm property |
| Application is 2 pages | Application is 28 pages |
| Maximum loan amount is $50,000 | Maximum Loan amount is $400,000 |
| Microloan Farm Ownership | Regular Farm Ownership Loan |
| No appraisal needed | Appraisal required |
| Option to substitute 1 year of business management, military service, or 16 hours of agriculture training to meet the 3 year farm management requirement | 3 years farm management required for ownership loans |
| Application is 2 pages; additional documents may be requested | Application is 28 pages |
| Repayment term is 25 years | Maximum term is 40 years |
| Maximum loan amount is $50,000 | Maximum loan amount is $600,000 |
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Loan secured with 100% collateral in the farm, the real estate being purchased or improved. Microloans are exempted from the
requirements of obtaining 150% security and taking a lien on non-essential assets. |
Loan secured with 100% to 150% collateral in the real estate being purchased or improved |
*Interest rates are the same as regular program rates. As of August 2022, the interest rates for Operating Microloans is 4.00% and Ownership Microloans is 4.25%.
To learn more about FSA microloans, ask questions, or get technical assistance, please contact Shakera by email at shakera@youngfarmers.org or call or text (518) 643-3564 x. 1.