Farm Bill Enhances Microloans for Farming Veterans

America Need Farmers, Veterans Need Jobs, So…

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Tanks to Tractors: USDA Loans Help Veterans Start Farms. David McNew/Getty Images

Thanks to of all places, the latest Farm Bill, U.S. veterans will find it easier to get low-interest Microloans​ to help them start and maintain small farms and ranches.

With the United States running out of farmers, and a growing number of new veterans needing jobs, the farming Microloan program for veterans, administered by the Farm Service Agency (FSA) of the U.S. Department of Agriculture, helps serve both needs.

Advantages of the Microloans

First of all, the 2014 Farm Bill specifically exempts the USDA Veteran Farmer Microloans from the more restrictive repayment terms required by other USDA Direct Operating Loans.

In addition, the program offers more flexible access to credit and serves as an especially attractive loan alternative for smaller farming operations like specialty crop producers.

Eligible Microloan applicants can borrow up to $35,000, with repayment terms that will not exceed 7 years. Additional loans are available to cover annual operating expenses and are repaid within 12 months or when the agricultural commodities produced are sold.

Under the Farm Bill, interest rates for veterans’ Microloans are limited to 5% or the current interest rate for traditional USDA Direct Operating Loans, whichever is less. As of February 2015, the interest rate for a USDA Direct Operating Loan was 2.625%.

The USDA has also seen to it that the Microloans for veterans will also have a simplified application process and less stringent requirements regarding farm management experience.

No Farming Experience?

According to the USDA, the Microloan program administrators realize that many veterans who apply for loans will not have the required “traditional farm experience” or have not been raised on a farm or ever even lived in a farming community.

Also See: New Website Helps US Veterans Find Careers in Agriculture

To accommodate them, the FSA says it will consider a veteran’s experience in small business or in any self-guided apprenticeship program as a way 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,” states the FSA.

What the Microloans Can Be Used For

Eligible veterans can use Microloans for:

  • 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 essential materials;
  • Minor farm improvements such as wells and coolers;
  • Hoop houses to extend the growing season;
  • Essential tools;
  • Irrigation; and
  • Delivery vehicles.

Eligibility: What is a ‘Veteran Farmer?’

Under the 2014 Farm Bill, “Veteran Farmers” are finally recognized as a separate and unique class of farmer for purposes of USDA loan eligibility. Except for the requirement of military service, the definition of Veteran Farmer is the same as the long-standing USDA definition of beginning farmers and ranchers.

According to the USDA, “beginning farmers and ranchers,” are defined as persons who have never operated a farm or ranch, or who have operated a farm or ranch for not more than 10 consecutive years.

So, Microloans for veterans are available to persons who have served in the Armed Services – and – have never operated a farm or ranch, or have operated a farm or ranch for not more than 10 years.

How to Apply for a Microloan

Eligible veterans can either download the USDA Microloan application from the USDA website or pick one up at their local Farm Service Administration field office.

Applicants who have problems gathering information or completing the application forms should contact their local Farm Service Administration office for help.

After completing the required paperwork, applicants should submit the farm loan application to their local Farm Service Administration office.