WASHINGTON, Jan. 15, 2013 – Agriculture Secretary Tom Vilsack announced today a “microloan” program aimed at boosting small and new farms by providing loans of up to $35,000 at an interest rate of less than five percent.
The program, which Vilsack said will be paid for with “existing resources,” looks to provide a “flexible way” to assist young farmers, returning veterans, and others with the means for purchasing necessary farm equipment.
“I have met several small and beginning farmers, returning veterans and disadvantaged producers interested in careers in farming who too often must rely on credit cards or personal loans with high interest rates to finance their start-up operations," Vilsack said. “By further expanding access to credit to those just starting to put down roots in farming, USDA continues to help grow a new generation of farmers, while ensuring the strength of an American agriculture sector that drives our economy, creates jobs, and provides the most secure and affordable food supply in the world."
Vilsack said the program will be administered through USDA's Farm Service Agency, and he promised a simplified loan application process. During a Jan. 15 teleconference, Vilsack said he could not detail how much the program will cost because of uncertainty about the department’s budget.
The USDA said producers can apply for the maximum of $35,000 to pay for initial expenses such as hoop houses, tools, irrigation, vehicles, and annual expenses such as seed, fertilizer, utilities, land rents, marketing, and distribution expenses. Over time, the USDA said, applicants can apply for operating loans up to the maximum amount of $300,000 or obtain financing from a commercial lender under FSA's Guaranteed Loan Program.
The announcement drew the support of the National Farmers Union (NFU).
“The next generation of family farmers is critical to the continuation of the long tradition of agriculture in our country,” said NFU President Roger Johnson. “Beginning farmers and ranchers and veterans will greatly benefit from this program, and a streamlined application process is of great value. Access to credit is one of the greatest challenges that beginning farmers and ranchers face, and I commend the department for proposing a common-sense way to help alleviate the problem.”
Vilsack said the final rule for the program will be printed in the Jan. 17 Federal Register.
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