FSA Loans Can Help Small Farmers Find Big Profits

You don't have to be a large-scale producer to pursue Farm Service Agency loans, which can help small farmers turn their hobbies into profitable ventures.

by Kristi Cook
PHOTO: USDA Farm Service Agency (FSA)

Because you’re reading Hobby Farms, chances are high that you’re either already a farmer or have dreams of becoming a farmer. For many of us, this dream of farming our own land—no matter how small or large that dream is—often seems just a bit out of reach. 

The reasons are myriad. They can range from a shortage of land, a demanding day job or even a simple lack of sufficient knowledge. However, for so many, the road blocks in our path often include insufficient funding, or capital, to put toward pursuing our dreams, no matter what size or type of farm fills our imaginations. 

This perceived lack of capital is often the primary culprit for losing faith in our dream farms. Did you catch that? I wrote “perceived.” Why? This financial obstacle may, in fact, not be a truth but merely a perception. 

Read on to discover an often-overlooked path that may be just what you need to make your dreams come true: the U.S. Department of Agriculture’s Farm Service Agency. I know it was for me.

Who’s Eligible?

First, let’s discuss the elephant in the room. Any time I used to see ads for farmers or farming aid, I assumed those programs were for established farmers or beginning farmers with deep pockets and hundreds or thousands of acres at his or her disposal. I didn’t believe that my little beekeeping operation was big enough to warrant even looking at those programs.

However, nothing could’ve been further from the truth. Farmers are literally anyone with any size farming operation that seeks to make some type of income from his or her efforts. So yes, you can be a “commercial” farmer, too. You  may already be one and just not know it yet.

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My Story

My own story and the path I’ve taken is evidence that anyone can farm when armed with the right information.

Just this past year, my beekeeping operation was at a crucial turning point. My bees were so strong and healthy that I had to decide whether I wanted to remain a hobby beekeeper with a small side income or continue growing my apiary into a much larger business and thus increase my side income. 

USDA Farm Service Agency FSA loans
Kristi Cook

I had one significant problem, though. I didn’t have the funds needed to grow any larger. So in dismay, I posted a notice that I would be selling out. I would retain only a few hives to keep my beekeeping urges pacified. 

Fortunately for me, I have an amazing mentor who continues to guide me after all these years. As soon as he saw my post, he knew something was up. He was more than well aware of how much my bees are an integral part of my day-to-day life.

(Translation: I was already a honeybee farmer. I just didn’t realize it.)

My mentor didn’t offer to buy me out or help me find someone who would. Rather, he recommended a sales strategy for the following year to help me pay off nonfarm debt. This would allow my bees to continue growing as I wanted.

(Again, even at my small size the previous year, I was already a farmer.)

This plan, in turn, resulted in the opportunity to speak with a Farm Service agent regarding the potential for funding to help me take that next big step into a much larger operation.

And I’m so grateful it did. Without FSA loans, I would just be a farmer without a farm.

Read more: Check out these 3 funding organizations for your next farm project.

A Little Disclaimer

First, let me just say that I don’t work for the USDA or the FSA. I do not receive any compensation for this article from these agencies.

Instead, I am just a beginning farmer who wants to share this opportunity with you. I know how deep down the farming urge goes. I also know how hard it often is to come up with the extra funding needed to build a dream into reality. 

Sharing information is what my freelance-writing day job is all about. I love helping folks discover ways to make their homesteading and farming dreams come true one step at a time. 

Connect With an Agent

Once you know what type of operation you’d like to pursue (or already have one in place that you want to build upon), you’ll need to locate your local FSA office to set up a meeting with an agent. These folks are there to guide and instruct you as to which programs may be a good fit for you. 

For example, in addition to the beginning farmer classification—which means any farmer with less than 10 years’ experience in most cases—the FSA is committed to serving all farmers and ranchers.

By statute, FSA targets a portion of all guaranteed loan funds, direct operating and direct farm ownership loan funds, microloan funding and youth loans, to historically underserved farmers and ranchers, which include “women, African-Americans, Alaskan Natives, American Indians, Hispanic, Asian, Native Hawaiians and Pacific Islanders.” 

There are even FSA loans for 4-H youth, veterans, low-income individuals and more. So it’s always best to get connected with an agent as soon as possible, even during the planning phase. That way, you can see which direction you should head.

In addition to guiding you down the best classification path for your personal situation, agents are trained to help you understand the importance of writing a business plan. It’s not as scary as it sounds.

They also help you organize your plan’s financial side to make record-keeping easier and see the big picture of your farming dream. Together, you’ll make sure you don’t miss an opportunity that you may not be aware of. 

My own agent was phenomenal in helping me discover which FSA loans best fit my operation. We also worked on keeping better records.

Just like a good farming mentor, a good FSA agent will essentially mentor you during the entire application process. Thus, they help you remove a lot of stress from the process.

Types of FSA Loans

So now that you know that, yes, you can be a farmer no matter how small your operation may be as long as the farming operation is intended to be a source of income, check out the USDA’s FSA programs. These programs help established farmers and, even more importantly, beginning farmers.

Here’s the best part. You don’t even have to have a farming operation already in place to get started. You just need a plan, a mentor and an agent. 

USDA Farm Service Agency FSA loans
Kristi Cook

A word of caution: Don’t let the big numbers discourage you. Remember, these are designed to work for all sizes of farmers.

To use my own operation as an example, one of the FSA loans I acquired to grow my own farm was no more than $10,000. So again, small does not mean too small to be a farmer. 

Here are a few programs as examples.

Land Purchase or Construction Project

  • Direct Farm Ownership Loans provide financing to secure farmland, improve or expand current operations, increase agricultural productivity and assist with land tenure to save farmland for future generations. The maximum amount available to qualified borrowers is $600,000.
  • Direct Farm Ownership Microloans are available for the same needs but limited to $50,000. The application process is simpler and requires less paperwork to complete.

Read more: Consider leasing farmland for a quicker start to your farm dreams.

Equipment, Seed, Livestock & Other Operating Costs

  • Direct Farm Operating Loans offer financing to purchase equipment, seed, livestock, other necessities to maintain a successful farm and refinancing farm related debts. The maximum amount available to qualified borrowers is $400,000.
  • Direct Farm Operating Microloans are available for the same needs but limited to $50,000. The application process is simpler and requires less paperwork to complete.

Youth Loans

Youth Loans offer financing up to $5,000 to aspiring farmers between the ages of 10 and 20, in connection with their participation in 4-H, FFA, Tribal youth group or other similar agricultural youth organization. 

Regardless of the size of your current farming operation or the size of your ideal farm, don’t let the perceived lack of funding kill your dreams. As in much of life, where there’s a will, there is most often a way to accomplish that which we set our minds to accomplish.

Farming is no different. In fact, owning a small or large family farm is one of the oldest American dreams we have. And the USDA’s Farm Service Agency may be just what you need to help get your dreams off the ground.

Sidebar: Poor Credit Problems 

Regarding the specific types of funding available, most funding options do not require stellar credit. To put it in the USDA Farm Service Agency’s own words: 

“Building a successful farm is a significant financial investment and can be especially challenging for beginning farmers who are not financially ready to access credit from commercial lenders… there is a special focus on the credit needs of farmers and ranchers who are in their first 10 years of operation. … Providing loan programs is important as beginning farmers have historically experienced more difficulties obtaining financial assistance.” 

As a vast majority of our nation’s farmers are nearing, and even entering, retirement age, the push to bring in new farmers to fill the resultant void is a primary focus of these programs.

Unfortunately, not all of us have perfect or even near-perfect credit, and we simply need a leg up to help us achieve our dreams of being part of the next generation of farmers. These programs fit that bill. Learn more here or visit the USDA Farm Service Agency website.

This article originally appeared in the May/June 2021 issue of Hobby Farms magazine.

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