Improvements to USDA Beginning Farmer Loans

By TRACI BRUCKNER

Center for Rural Affairs

USDA recently announced several changes to Farm Service Agency (FSA) loan programs, changes designed to help more beginning farmers and ranchers. The new “interim final rule” will increase the Microloan limit from $35,000 to $50,000. This program provides a simplified application process and a seven year payback. Microloans can be used for approved operating expenses, such as seed, fertilizer, utilities, land rents, marketing, distribution, living expenses, livestock, equipment, hoop houses, tools, irrigation and delivery vehicles.

USDA is also changing the “experience” requirement for FSA Direct Farm Ownership loans. Previously, applicants had to prove they participated in the operations of a farm for at least three years. Beginning farmers across the country identified this restriction as a real barrier. It is not reflective of current realities in which new farmers enter agriculture.

The change will allow beginning farmers and ranchers to substitute one year of that three-year requirement with a formal farming apprenticeship, operation or management of a non-farm business, leadership or management experience while serving in any branch of the military, advanced education in an agricultural field, and significant experience in a farm-related agricultural career.

USDA also proposes changing the types of farming entities eligible to apply, potentially opening the door to non-majority investors who are not actively farming or managing the operation. We’ll watch these changes closely. The deadline to submit public comments on these changes to the USDA is December 8, 2014. Contact Traci Bruckner, tracib@cfra.org, for more information.