By Hannah Ruth Tabler, NFU Intern
Many beginning farmers, after earning enough experience to feel confident starting their own operation, cannot afford the high upfront costs associated with such an endeavor. At the same time, new producers often lack extensive credit history or adequate collateral for traditional loan providers. This makes it difficult to start and sustain new farms, discouraging young people from even considering agriculture as a career option. However, a host of government and nonprofit organizations can assist beginning farmers with acquiring the necessary funds to run an operation.
The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) provides funds to ensure that farmers can sustain their businesses as well as invest in new technologies and ventures. They can offer coverage for risk management, organic certification, disaster relief, and much more. The FSA Farm Loan Program staff assist farmers by providing loans and grants to help offset the risk of starting a farm.
The National Young Farmers Coalition (NYFC) is an organization working to engage and mobilize young farmers across the country. They offer education and resources to beginning farmers to assist them in the process of obtaining and keeping land. They have worked with the FSA to increase funding opportunities for young farmers with programs such as the Farm Storage Facility Loan, which helps producers build or upgrade facilities to store commodities. They also run awareness campaigns on student loan debt, land access, the western water crisis, and more. Interested young farmers should visit their website for more information: http://www.youngfarmers.org/.
NYFC created the FSA Loan Guidebook to inform beginning farmers about their funding options. The guidebook includes basic information on the USDA and FSA as well as specific information about each loan type, eligibility requirements, and how to apply. The guidebook is easily readable and features graphics and illustrations designed to make loan information simple to understand.
There are two main types of FSA loans: guaranteed loans and direct loans. Guaranteed loans are given by a USDA-approved lender with the backing of the FSA. Direct loans are given directly by the FSA to the applicant. FSA loans of all types are generally low-interest, public loans that are easier to acquire than traditional bank loans. There are also especially available funds for underrepresented populations, such as women, farmers of color, and veterans. The USDA also administers other types of loans and grants through other agencies.
The guidebook covers all requirements to receive a loan from the FSA. For example, applicants must have a reasonable credit history and a workable farm business plan. The FSA will look at your financial history and plan for your business and decide what loan is the best fit for you. Loans can fund a wide variety of endeavors, including purchase of livestock and land, renovations to storage facilities, and youth projects through 4-H and FFA.
The manual will walk you through the steps of the application process as well as explain what happens next if you are approved or rejected. It also features testimonials from farmers that have received FSA loans to jumpstart their business.
If you’re interested in reading this guidebook for yourself, it’s available for free here.