Federal Grants and Loans for Small Farms

Federal grants and loans for starting a farm are available to individuals who want to start their own farm or expand and existing one, but are unable to get credit through other means. Applicants must have a demonstrated ability to run a farm, either previous experience or by receiving an agriculture-related degree. The loans may be used to purchase livestock and machinery, improve or remove existing structures and for start-up costs relating to running a farm.

There aren't as many grants as there are loans available for starting or improving an existing farm. If you wish to apply for a farm grant, you must provide all of the supporting documentation, which usually includes a business plan that emphasizes sustainability. Grant applications must be received by the due date in order for consideration. Exceptions aren't made for applications received after the deadline.

If you haven't ever applied for a grant for your farm before, it is a good idea to speak with someone who has. Grant applications can be confusing, and every aspect of the application must be completed properly in order for your application to be considered. Forgetting to fill out a section of the application may result in your application being denied. The appeals process for a denied application is almost more difficult than the application process itself; it is better to do it right the first time than risk having your application denied on a technicality.

Places to get help in applying for state and federal grants include the following:

• Cooperative Extension - local agents at your county level who know what grants are available and may be able to offer application assistance, depending upon their level of expertise
  
• Small Business Development Centers - a great source for finding individuals who can walk you through the application process, writing business plans as well as what grants and loans may be available to you.
  

The following are websites you may use to search and apply for Federal small farm and family farm grants:

• USDA Small Farm Funding Resources
• USDA National Institute of Food and Agriculture - Grant Search Engine
  
• USDA Rural Cooperative Development Grant Program
  

Be aware that after you receive your grant, the work isn't over yet. Most grant programs require that you provide documentation on how you used the money that you were given. This includes providing receipts for all transactions where grant money was used.

If you don't qualify for any farm grants, don't be disheartened. There are many beginner farm loans available (also known as Aggie Bonds), even for those who don't have perfect credit. What you will need, however, is concrete knowledge on how to run a farm, and specifically how to run the type of farm you intend to start (dairy, crops, beef, etc). Qualifications for this part of the loan process can be met either through providing a copy of your degree in agriculture from an accredited college or by proving you've worked on a family farm or were paid to work on another farm, usually for a minimum period of 3 years.

The second part of the loan process includes a business plan for a type of sustainable agriculture. Loans are available both to individuals and cooperatives that intend to produce a product or products on the farm that can be carried on from year to year. Farm loans can be used to purchase livestock, seed, feed, buildings, tractors and other farm-related expenses.

If you haven't written a business proposal before, get assistance (as referenced above for farm grants) through your local Small Business Development Centers or county Cooperative Extension offices.

Places to find applications for Federal farm loans include the following online resources:

• State Departments of Agriculture - browse by your state to learn about current loan opportunities
• Aggie Bond Beginner Farm Loans - includes links to states offering the Aggie Bond Loan programs as well as how to apply in your state
• Farm Service Agency - browse by state
• Farm Loan Application - download applications directly from the Farm Service Agency
• Farm Credit Network
• Farm Credit Council
  

Starting a farm is no different than starting any other business. It requires planning, setting goals and financing in order to be a success. This means that you should have the financing in place before you start looking for a farm or other farm-related items to buy. The loan application process usually takes 1-2 months to complete; grants may take longer to be approved or denied.

As someone who has gone through both the loan and grant process myself, I firmly believe that you should talk with people who can guide you through the application process instead of going it alone. Sometimes how you word a business plan can mean the difference between getting that loan or grant, or being denied. Nothing is more frustrating to find out you've been denied and learning that you may have to wait another year to apply again. The Small Business Development Center made all the difference as they have knowledgeable staff to guide you through planning a business, from beginning to end. In addition, you'll find that many Cooperative Extension agents can also help you flesh out business proposals and help you avoid pitfalls that others have experienced.