The Farm Service Agency (FSA) developed the Microloan (ML) program to better serve the unique financial operating needs of beginning, niche and the smallest of family farm operations. Designed for smaller farming operations like specialty crop producers and operators of community supported agriculture (CSA).

USDA continues to focus on making sure that credit is available to America’s farmers and ranchers. The Microloan program is part of USDA’s ongoing efforts to streamline and modernize its service to American agriculture. The Microloan program, which will be administered through FSA’s existing Operating Loan program, is designed to better meet the unique credit needs of beginning and socially disadvantaged farmers and of the smallest family farms. The Microloan program simplifies and streamlines the process for producers obtaining loans under $35,000; it cuts the paperwork burden in half and simplifies the loan application process.

The Microloan program seeks to more effectively use FSA resources. The improvements aim to offer more efficient processing times for smaller loans, adding flexibility to some of the loan eligibility requirements, and reducing the application requirements. As their financing needs increase, applicants can apply for an operating loan up to the maximum amount of $300,000 or obtain financing from a commercial lender under the Guaranteed Loan Program. According to the 2007 Census of Agriculture, 71 percent of all farm operations gross less than $25,000 per year. Operators of these types of small farms are not typically served by agricultural lenders and may have difficulty obtaining financing from commercial lenders.

Since 2009, USDA has made a record amount of farm loans through FSA — more than 128,000 loans totaling nearly $18 billion. USDA has increased the number of loans to beginning farmers and ranchers from 11,000 loans in 2008 to 15,000 loans in More than 40 percent of USDA’s farm loans now go to beginning farmers. USDA has increased its lending to socially-disadvantaged producers by nearly 50 percent since 2008.

Use of Microloans Initial start-up expenses Seed, fertilizer, utilities, land rents Marketing and distribution expenses Family living expenses 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 Delivery vehicles

Simplified Application Process Less paperwork to fill out Requirements for managerial experience and loan security have been modified to accommodate smaller farm operations, beginning farmers and those with no farm management experience. ML program applicants 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. Opportunity to gain farm management experience while working with a mentor during the first production and marketing cycle.

Security Requirements For annual operating purposes, microloans 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. 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.

Rates and Terms Eligible applicants may obtain a microloan for up to $35,000. 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 OL rates that are in effect at the time of the microloan approval or microloan closing, whichever is less.

NY FSA FARM LOAN TEAMS 1.Wash/Warren/Saratoga 2530 Rt. 40, Greenwich, NY Steuben/Yates 415 W. Morris St., Bath, NY Schen/Schoharie 108 Holiday Way, Schoharie, NY St. Lawrence 1942 Old DeKalb Rd, Canton, NY Ontario 3037 County Road 10, Canandaigua, NY Orange 225 Dolson Ave. Suite 1A, Middletown, NY Chautauqua 3542 Turner Rd., Jamestown, NY Jefferson POB 838, NYS Rt. 232, Watertown, Genesee 29 Liberty St., Suite 4, Batavia, NY Cortland/Tompkins 1 N. Main Street, Cortland, NY Oneida 9025 River Rd., Rm. 201, Marcy, NY

U.S. Department of Agriculture – Rural Development

Value Added Producer Grant (VAPG) Provides grant funds for planning and working capital expenses to help agricultural producers enter into value-added activities related to the processing and marketing of bio-based products Expands markets for, and increases financial returns to, the agricultural producer-owners of the venture Strengthens the rural economy

Product Eligibility Any agricultural commodity or product that Has undergone a change in physical state Was produced in a manner that enhances the value of the agricultural commodity or product, as demonstrated through a BP that shows the enhanced value Is physically segregated in a manner that results in the enhancement of the value of the Agricultural Commodity or product Is a source of farm- or ranch-based renewable energy, including E-85 fuel Is aggregated and marketed as a locally-produced agricultural food product

Locally Produced Foods Eligible: A raw, cooked, or processed edible substance, beverage, or ingredient intended for human consumption Not eligible: Animal feed, live animals, non- harvested plants, fiber, medicinal products, cosmetics, tobacco products, narcotics

Applicant Eligibility Independent Producers (IP) Agricultural Producer Groups (APG) Farmer or Rancher Cooperatives (Coop) Majority-Controlled Producer Based Business Ventures (MCPBBV) Must currently produce and own >50% of the agricultural commodity that will be used for the value added product, and retain ownership from its raw commodity state through the marketing of the final value added product

Grant Terms Maximum Grant Amounts Planning $100,000 Working Capital $300,000 Maximum Budget and Project Period Length up to 36 months, scaled to complexity If applicant currently has a VAPG, it must be completed prior to application deadline to apply for new funds

Eligible Use of Funds Planning Activities Feasibility Study Business Plan Marketing Plan Legal Advice Working Capital Activities Pay operational costs directly related to the VA project Salaries, utilities, inventory, marketing campaign, accounting system

Ineligible Use of Funds No equipment No buildings No vehicles No grant preparation No architectural or engineering design work for a specific facility No agricultural production No assistance to entities not majority US owned No industry-level FS and BP templates No conflicts of interest No costs incurred prior to grant approval

FY 2012 Summary $14 Million - Nationally Competitive Grant Funds Reserved Funds: 10% Beginning (BFR) or Socially Disadvantaged Farmers or Ranchers (SDFR) 10% for Mid-Tier Value Chain Projects Priority Points for BFR, SDFR, and Operators of Small or Medium-Sized Family Farms

FY 2013 NOSA in Clearance Speculation FY 2012 Funding Levels State Allocations

Beginning Farmer or Rancher An entity in which all owners (a) have operated a farm or a ranch for not more than 10 years; (b) materially and substantially participate in the operation of a farm or a ranch; and (c) provide substantial day-to-day labor and management of a farm or ranch. A Reserved Funds Category, and also an Applicant Type Scoring Priority for General Funds competition IRS 1040 or 1065 from previous 10 years showing applicant did not file farm operating income, or a letter from a CPA or attorney indicating the applicant meets eligibility requirements.

Small to Medium Size Farm or Ranch Based on three-year average of annual gross sales of agricultural product Small: $250k or less Medium: $250,001 - $1,000,000 Factors into priority scoring for Small-Medium Family Farms in General Funds competition Factors into MTVC projects

Matching Funds Matching funds must equal or exceed the amount of grant funds requested, be contributed during the grant period, and be spent in advance of grant proportional rate Applicant Cash/Loan/LOC Applicant/Family In-Kind up to 25% total project cost Third-Party Cash/In-Kind Expected Program Income not eligible at time of application Matching funds subject to the same use restrictions as grant funds for eligible P or WC activities

Feasibility Studies Required for working capital applications Exceptions IP applying for a grant of ≥ $50k, demonstrating market expansion for an existing VA product that they currently own and produce from at least 50% of their own agricultural commodity, and that they have produced and marketed for at least 2 years at time of application submission Working capital grant applications requesting less than $50k

Contact Information Gary Pereira Business Programs Specialist USDA Rural Development 9025 River Rd., Room 205 Marcy, NY Phone x 129 Cell