FAQ: USDA has proposed a new Microloan to help smaller farmers and beginning farmers. It's a modification of the rules to FSA's Operating Loans program. How will this proposed new program work?
Answer: John Whitaker, state executive director for USDA's Farm Service Agency in Iowa, says USDA is seeking comments on proposed modifications to its Operating Loans application, eligibility and security requirements for new a Microloan or program. These loans will better serve the unique operating needs of small family farm operations, he says.
"This new proposed loan program has potential for helping a new generation of farmers by expanding access to credit," says Whitaker. "These loans are intended to make our Operating Loan program more widely available and attractive to smaller farm operators by streamlining the process and adding flexibility in meeting farm experience requirements."
Proposal would simplify and streamline process to get a loan
Under the Microloan proposal, producers who need a loan for less than $35,000 may apply using simplified and streamlined procedures. The program will reduce paperwork and simplify the process to obtain a loan. 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.
Public comments must be submitted no later than July 23, 2012
"I encourage potential customers of this program to review the proposed rule and make comments to USDA," adds Whitaker. "With your input, this program can better meet your needs."
The proposed rule may be viewed at www.fsa.usda.gov/FSA/federalNotices?area=home&subject=lare&topic=frd-pi or through the FSA home page at 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, FSA, USDA, 1400 Independence Avenue, SW, Stop 0522, Washington, DC 20250-0522.
Number of loans to beginning farmers in Iowa up significantly
Since 2007, the number of loans to beginning farmers in Iowa has grown by 152%. More than 70% of FSA's farm loans went to beginning farmers in 2011.
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.
For information on this and other programs administered by FSA, contact your local office or visit www.fsa.usda.gov.