USDA Proposes Bridge Loan Program for Beginning Farmers
In Friday’s Federal Register, Under Secretary for the farm and foreign agricultural service, Michael Scuse says a proposed rule creating a micro-loan program will be published:
“What we are asking is for the public to go into the registrar, go to the USDA website, take a look at the proposed rule, and if they have comments on it, we’d like them to voice them so we can have all of those comments back before July 24. That will give us an opportunity to review both the positive and the negative comments, take them into consideration and then look to make a final rule.”
Scuse explains that the program will work a little differently than other USDA financial assistance:
“We are hoping that this program will allow us to do micro loans up to $35,000 for smaller operations. Hopefully a lot of these operations will be for young and beginning farmers, as well as minority and socially disadvantaged farmers. Many individuals who are having a hard time getting credit, we will hopefully, once this is put into effect, be able to loan them that amount of money for expenses.”
Also, the paper trail is less than half of other programs, and only one year of financial documentation will be required, versus three years with other USDA loans.
Scuse explains that this is a bridge program to help transition farmers from using USDA funds for operating expenses into mainstream lending institutions:
“Its very difficult for individuals to get involved in agriculture today, and in fact it has been for quite some time. If you look at the financial requirements and the risk, many of the traditional lending institutions really are not interested in providing this type of funding to young or beginning farmers. This will help these types of groups to get involved in farming.”
While only in the proposed/comment stage, Scuse says they’re looking to have something implemented before the end of the year:
“Hopefully we will be able to make this availably at some time later this year. Its necessary for us to go through the public comment period. Once that ends July 24, we can review those and come out with a final rule.”
Scuse also had these thoughts:
“In just 2008, we make loans to about nine thousand beginning farmers and ranchers. This past year, that number went to fifteen thousand. There is an interest out there to get involved in agriculture and we feel that this will increase that interest.”
USDA Undersecretary Michael Scuse.