Beginning farmers don’t need much money to get started. But until now, the USDA had no way of giving them any loans at all.
Farmers are not a good investment risk. Their business requires substantial influxes of capital to erect barns, buy tractors, and plant seeds, with little guarantee of return. When a river floods or a heat wave hits, it can throw the best business plan off course. One of the best ways for farmers to borrow money is to ask the U.S. Department of Agriculture, which can provide hundreds of thousands of dollars in financing. (Unfortunately, there’s a huge amount of paperwork involved in these loan programs.)
But young and beginning farmers don’t need all that. Starting out, a farmer might need a few thousand to buy a truck, some tools, or a round of seed. Young farmers who want to start small, often organic farms have had trouble getting access to that kind of money. When the National Young Farmers Coalition asked beginning farmers last year to list the challenges they faced, lack of capital came out on top.