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FACT SHEET Microloans August 2019

Farm Service Agency

Overview

The Farm Service Agency (FSA) developed the 

microloan program to better serve the unique financial 

operating needs of new, niche, and small to mid-sized 

family farm operations.

Microloans offer more flexible access to credit and 

serve as an attractive loan alternative for smaller 

farming operations, like specialty crop producers and 

operators of community supported agriculture (CSA). 

These smaller farms, including non-traditional farm 

operations, often face limited financing options.

Types Of Microloans

Two types of microloans are available: Farm Operating 

Loans and Farm Ownership Loans. The microloans are 

issued to the applicant directly from FSA.

• Operating microloans can be used for all approved

 operating expenses authorized by the FSA Operating

 Loan (OL) Program, including but not limited to:

 initial start-up expenses; annual expenses such as

 seed, fertilizer, utilities, land rents; marketing and

 distribution expenses; family living expenses;

 purchase of livestock, equipment and other materials

 essential to farm operations; minor farm

 improvements such as wells and coolers; hoop

 houses to extend the growing season; essential tools;

 irrigation; and delivery vehicles.

• Ownership microloans can be used for all approved

 expenses authorized by the FSA Farm Ownership

 (FO) Loan Program, such as to purchase a farm or

 farm land, enlarge an existing farm, construct new

 farm buildings, improve existing farm buildings, pay

 closing costs, and implement soil and water

 conservation and protection practices.

Simplified Application Process

The microloan application process is simpler, requiring 

less paperwork to complete, consistent with a smaller 

loan amount. Requirements for managerial experience 

and loan security have been modified to accommodate 

veterans, smaller farm operations, and beginning 

farmers.

• Microloan applicants for operating loans will need to

 have some farm experience; however, FSA will

 consider an applicant’s small business experience, as

 well as any experience with a self-guided

 apprenticeship, as a means to meet the farm

 management requirement. This will assist applicants

 who have limited farm skills by providing them with

 an opportunity to gain farm management experience

 while working with a mentor during the first

 production and marketing cycle.

• Microloan applicants for ownership loans need to

 have three years of farm experience out of the last

 10 prior to the date of the application being

 submitted. One of the years can be substituted with

 any of the following experience:

 - Post-secondary education, that is at least 16

 semester hours in agricultural business,

 horticulture, animal science, agronomy, or other

 agriculture-related fields
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MICROLOANS - AUGUST 2019

 - Significant business management, that is at least

 one year of management experience in a non

 ag-related field where the applicant’s day-to-day

 responsibilities included direct management

 experience, such as personnel decisions, payroll,

 and inventory ordering; however, not an individual

 who is a manager in title only

 - Military leadership or management that is, as a

 general rule, any officer or E5 or above will have

 completed an acceptable military leadership

 course.

 - If an applicant has successfully repaid an FSA

 youth loan, that experience may partially satisfy

 the experience requirement for a farm ownership

 loan.

Security Requirements

Operating microloans for annual operating expenses 

must be secured by a first lien on a farm property or 

agricultural products having a security value of at least 

100 percent of the microloan amount, and up to 150 

percent, when available. Operating microloans made 

for purposes other than annual operating expenses 

must be secured by a first lien on a farm property or 

agricultural products purchased with loan funds and 

having a security value of at least 100 percent of the 

microloan amount.

Ownership microloans are secured by the real estate 

being purchased or improved. The value of the

real estate must be at least 100 percent of the loan 

amount.

Rates And Terms

Applicants may apply for microloans totaling a 

combined maximum of $100,000: Up to $50,000 for a 

farm ownership loan and up to $50,000 for an 

operating loan.

For operating microloans, eligible applicants may 

obtain up to $50,000. The repayment term may vary 

and will not exceed seven years. Annual operating 

loans are repaid within 12 months or when the 

agricultural commodities produced are sold. Interest 

rates are based on the regular FSA operating loan rates 

that are in effect at the time of the microloan approval 

or microloan closing, whichever is less.

For ownership microloans, eligible applicants may 

obtain a microloan for up to $50,000. The repayment 

term may vary and will not exceed 25 years. Interest 

rates are the regular FSA farm ownership rates in 

effect at the time of the loan approval or closing.

How To Apply

FSA microloan application forms can be obtained from 

the local FSA office or can be downloaded and printed 

from the USDA website at fsa.usda.gov/microloans.

Applicants who are having problems gathering 

information or completing forms should contact their 

local FSA office for help. After completing the 

required paperwork, an applicant should submit the 

farm loan application to their local FSA office. To find 

your local FSA office, visit farmers.gov.
USDA is an equal opportunity provider, employer, and lender. 3

MICROLOANS - AUGUST 2019

What Happens After A Loan 

Application Is Submitted?

After a loan application is submitted, FSA reviews the 

application and determines if the applicant is eligible 

for the requested loan. The applicant will receive 

written notification of each step in the process, such as 

when the application is received, determination is 

made and when a final decision is made. If the 

application is approved, FSA makes the loan and funds 

are distributed as needed. If the application is denied, 

the applicant is notified in writing of the specific 

reasons for the denial and provided reconsideration 

and appeal rights.

Who Is Eligible?

To qualify for assistance, the applicant must not be 

larger than a family-sized farmer, have a satisfactory 

history of meeting credit obligations, be unable to 

obtain credit elsewhere at reasonable rates and terms 

and meet all other loan eligibility requirements.

More Information

For more information, visit fsa.usda.gov/farmloans

or farmers.gov. Find your local USDA Service 

Center at farmers.gov/service-locator.