The U.S. Department of Agriculture announced the availability of a streamlined version of USDA guaranteed loans, which are tailored for smaller-scale farms and urban producers. The program, called EZ Guarantee Loans, uses a simplified application process to help beginning, small, underserved and family farmers and ranchers apply for loans of up to $100,000 from USDA-approved lenders to purchase farmland or finance agricultural operations.
"Over the past seven years, we have been transforming our loan programs at USDA so that they can be attainable and useful to all kinds and sizes of producers," Agriculture Secretary Tom Vilsack said. "These EZ Guarantee Loans will help beginning and underserved farmers obtain the capital they need to get their operations off the ground, and they can also be helpful to those who have been farming for some time but need extra help to expand or modernize their operations. USDA's Farm Service Agency (FSA) has offices in nearly every county in the country, and we encourage all farmers, including those in urban areas, to stop in and inquire about this program."
USDA also unveiled a new category of lenders that will join traditional lenders, such as banks and credit unions, in offering USDA EZ Guarantee Loans. Microlenders, which include Community Development Financial Institutions and Rural Rehabilitation Corporations, will be able to offer their customers up to $50,000 of EZ Guaranteed Loans to help reach urban areas and underserved producers. Banks, credit unions and other traditional USDA-approved leaners can offer customers up to $100,000 to help with agricultural operation costs.
According to the 2012 "Census of Agriculture," 75% of all farm operations gross less than $50,000 per year. EZ Guarantee Loans offer low interest rates and terms of up to seven years for financing operating expenses and 40 years for financing the purchase of farm real estate. USDA-approved lenders can issue these loans, with FSA guaranteeing the loan up to 95%.
USDA is providing a 90-day period for the public to review and comment on program improvements. To review program details, visit www.regulations.gov, reference RIN 0560-AI34 and follow the instructions to submit comments.
More than half of all FSA loans go to new farmers and more than a quarter to underserved borrowers. FSA also offers loans of up to $5,000 to young farmers and ranchers though the Youth Loan Program. Loans are made to eligible youth to finance agricultural projects, with almost 9,000 young people now participating. More information about the available types of FSA farm loans can be found at www.fsa.usda.gov/farmloans or by contacting a local FSA office, the locations of which can be found at http://offices.usda.gov.
USDA's EZ Guarantee Loans are an additional tool to support strong local and regional food systems as well as organic agriculture. Across USDA, the Know Your Farmer, Know Your Food Initiative coordinates the department's policy, resources and outreach efforts related to local and regional food systems.