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FSA microloan option intended for small scale producers

By SEAN CLOUGHERTY
Managing Editor

VIENNA (Nov. 1, 2016) — With aging trucks in his fleet, John Semanchik was already in the market for a new truck when he found out about an update to the Farm Service Agency’s Farm Storage Facility Loan program that included trucks.
In April, FSA announced a new “microloan” option to its FSFLs, which allows applicants seeking less than $50,000 to qualify for a reduced down payment from 15 percent to five percent and no requirement to provide three years of production history. Farms and ranches of all sizes are eligible.
At the end of September, Semanchik became New Jersey’s first recipient of an FSFL microloan.
“I was looking for a truck anyway ,and their loan rate you can’t beat,” Semanchik said. “It was pretty easy and it was quick compared to most government programs.”
Semanchik’s new truck has about 220 more bushels of storage capacity than the rest of his trucks but is still small enough to manuever in the small fields he farms. Between hay and grain, he farms about 700 acres.
The broader Farm Storage Facility Loan program provides low-interest financing for producers to build or upgrade farm storage and handling facilities to store eligible commodities they produce. A producer may borrow up to $500,000 per loan, with a minimum down payment of 15 percent. Loan terms are up to 12 years, depending on the amount of the loan. Producers must demonstrate storage needs based on three years of production history.
Earlier this year, FSA significantly expanded the list of commodities eligible for Farm Storage Facility Loan. Eligible commodities now include aquaculture; floriculture; fruits (including nuts) and vegetables; corn, grain sorghum, rice, oilseeds, oats, wheat, triticale, spelt, buckwheat, lentils, chickpeas, dry peas, sugar, peanuts, barley, rye, hay, honey, hops, maple sap, unprocessed meat and poultry, eggs, milk, cheese, butter, yogurt and renewable biomass.
FSFL microloans can also be used to finance wash and pack equipment used post-harvest, before a commodity is placed in cold storage.
According to FSA, the microloan option is expected to be of particular benefit to smaller farms and ranches, and specialty crop producers who may not have access to commercial storage or on-farm storage after harvest.
The microloan option allows farmers to invest in equipment like conveyers, scales or refrigeration units and trucks that can store commodities before delivering them to markets. Producers do not need to demonstrate the lack of commercial credit availability to apply.
Lindsay Caragher, county executive director for the Farm Service Agency’s Hacketstown office, who worked on Semanchik’s loan, said FSA has made 41 FSFLs in New Jersey and in her office’s seven county area, loans have been made to farmers for a variety of storage structures including grain bins, hay barns, cold storage facilities and milk tanks.
“Every aspect of what we can do we have had a loan in or had interest in,” Caragher said. “That’s what makes this program helpful for farmers especially specialty crop producers.”