The low-interest microloans” of up to $35,000 are designed to aid startup costs, bolster family-run farms and help minority growers and military veterans who want to farm. The past three years have had a 60 percent rise in local growers selling directly to consumers or farmers markets, Agriculture Department Secretary Tom Vilsack said.
Kay Jensen, an organic farmer who grows broccoli, strawberries and tomatoes in Wisconsin, saw two immediate benefits from the program: paperwork would go from about 30 pages to seven, and it would be easier to borrow a manageable sum. “A lot times what we need is just small amounts of money, but a lot of times the only funding available is large amounts of money,” she said. “This whole concept of a microloan, where you're looking at smaller, reasonable amounts of money, this really fits an incredible niche.”
The loan can cover costs of renting land, buying seed and equipment, and other expenses. One goal is to create more opportunities for entrepreneurship and employment in the farming industry, Vilsack said. Another is to provide beginners a chance to build credit, so they can eventually qualify for higher-value loans and expand.
“It's about making sure that we have diversity within agriculture, that we have a good blend of large production facilities, medium-sized operations and smaller operations,” Vilsack said. “It will help bolster the local and regional food system movement that is taking place.”
The loans could help urban farmers who grow fruits and vegetables — or raise chickens for eggs or bees for honey — on lots as small as one-eighth of an acre, said Chad Hellwinckel, a research assistant professor at the Agricultural Analysis Center at the University of Tennessee in Knoxville.
The interest rate for the loan program changes monthly and is now 1.25 percent, the USDA said. Loans do not have to be repaid for seven years.