The borrowing limit for USDA microloans was increased on November 7 to $50,000. The previous cap was $35,000. "Microloans offer borrowers simplified lending with less paperwork," says John Whitaker, state executive director for USDA's Farm Service Agency in Iowa. "The loans are available from FSA to give qualified borrowers a first opportunity to begin farming or to help farmers quickly expand existing operations."
"This will help more people because of new flexibilities created by the 2014 Farm Bill," Whitaker says. "We're especially excited in Iowa, because we want to encourage more beginners and young people, especially those from historically underserved communities, to consider farming as a way to become independent businessmen and women. It's a rewarding way to build or expand a family operation."
Larger loan amount offers beginning farmers more opportunities
The microloan change allows beginning, small and mid-sized farmers to access an additional $15,000 in loans using a simplified application process with up to seven years to repay. Microloans are part of USDA's continued commitment to small and midsized farming operations.
To complement the microloan program additional changes to FSA eligibility requirements will enhance beginning farmers' access to land. Access to land is a key barrier to entry level producers.
Public comment period on changes to microloan eligibility
FSA policies related to farm experience have changed so that other types of skills may be considered to meet the direct farming experience required for farm ownership loan eligibility. Operation or management of non-farm businesses, leadership positions while serving in the military or advanced education in an agricultural field will now count toward the experience applicants need to show when applying for ownership loans.
"If you want to comment on our changes to the microloan program and loan eligibility, you have an opportunity to share suggestions," says Whitaker. The comment period runs through Dec. 8, 2014.
Since 2010, FSA has made a record amount of farm loans — more than 165,000 loans totaling nearly $23 billion. More than 50% of USDA's farm loans now go to beginning farmers. In addition, FSA has increased its lending to socially-disadvantaged producers by nearly 50% since 2010.
USDA extends dairy program signup deadline to Dec. 5
In other USDA farm program news, farmers now have until Dec. 5 to enroll in USDA's new dairy Margin Protection Program. The MPP is a voluntary program that provides financial assistance to participating farmers when the margin (difference between price of milk and feed costs) falls below the coverage level selected by the farmer.
USDA officials extended to deadline to Dec. 5 to give producers more time to make thoughtful, well-studied choices, says Whitaker. Markets change and the Margin Protection Program can help protect dairy farmers from adverse shifts. They are encouraged to use the online resource at www.fsa.usda.gov/mpptool to calculate the best levels of coverage for their dairy operation.