Follow the Money

2/2/2013 7:00 AM
By Shannon Sollinger Virginia Correspondent

CASA Conference Spotlights Loans and Grants for Beginning Farmers

LEESBURG, Va. — Getting a farm or rural enterprise started can cost a lot of money. Turns out, at the local, state and federal levels, there are lots of people who want to connect the entrepreneurs with the cash necessary to get started or to expand.

A Saturday morning, Jan. 19, session of the 14th annual Future Harvest CASA conference in Leesburg put together a panel of those people who can help get farmers going on a solid financial footing.

Track 1 of the conference, “Beginning Farmers,” was one of six offering multiple sessions over two days for conference goers. Other focuses included “Scaling Up,” “Grass-Based Systems,” “Local Food Communities,” “Fruit and Vegetable Production” and “The Business of Farming.”

The third of five sessions for beginning farmers looked at “Farm Grant, Cost-Share, Incentive and Loan Programs.”

“There’s a perception that USDA is too big to deal with,” said Lucie Snodgrass, executive director, USDA Maryland Farm Service Agency. “USDA has realized that and has shifted its approach.”

Just this week, Snodgrass said, the USDA launched its new microloan program, “perfect for this audience.”

The microloan program offers loans of up to $35,000 and the applicant must show at least one year experience, but “experience is flexible in definition. A mentorship would qualify, or experience in a different small business,” Snodgrass said.

And the loan can be used in a variety of ways. Putting up a hoop house and need a bridge loan to carry you over until the first crop comes in? This loan can do that.

USDA financing is in a “fluctuating situation,” Snodgrass noted, in the absence of a new Farm Bill. But Congress extended the old Farm Bill until Sept. 30 of this year, and although some programs have not been renewed and others not funded, “we do have money for this program.”

FSA has offices in 21 Maryland counties, Snodgrass said, usually co-located with a county rural development office or the NRCS, and provides service in all Virginia counties.

Jeremy Burner (Jeremy.Burner<\ operations and farm ownership.

The operating loans are for seven years, he said, and can be applied to seed, equipment, greenhouses, livestock and small construction projects.

The farm ownership loans are capped at $300,000 — which won’t go far in many parts of Virginia and Maryland — but the borrower can get backup from Farm Credit and other entities. To get a loan to buy land, he explained, the borrower must have three years experience in the last 10 years, at least one of those years in the last three.

The land loans can be amortized over 40 years, he said, but he tries to keep it at 30 so the farmer can pay off the loan and free up cash.

Rates change monthly and in January stood at 1.25 percent for operations, and 3.25 percent for land. Those rates change monthly, but then lock in for the life of the loan.

The new microloans, Burner said, “are more lenient on experience.”

It’s not unusual for farmers or entrepreneurs to have collections or judgments against them. Even that is not a deal-breaker, Burner said, if the applicant has a payment plan in place.

Good news for aspiring entrepreneurs in Virginia includes the Governor’s Agriculture and Forestry Incentive Fund (AFID), funded last year by the General Assembly. The fund just concluded its first grant, $65,000 to Homestead Creamery in Franklin County.

“The AFID grant is a tool for local governments to grow business,” said Stephen Versen (Stephen.Versen<\@>, project manager in the Virginia Department of Agriculture and Consumer Services. A local government, in partnership with the rural entrepreneur, applies for an AFID grant for the development of a facility “that adds value to a Virginia grown product.”

Successful grant applications will meet the following conditions: the business produces value-added agricultural or forestal products; a minimum of 30 percent of the agricultural or forestal products to which the proposed facility is adding value are produced within the Commonwealth of Virginia; the grant request does not exceed $250,000 or 25 percent of qualified capital expenditures, whichever is less; the applicant provides a dollar-for-dollar matching financial commitment, cash or in-kind.

“My job,” Versen said, “is to help small rural business succeed.” To do that, he helps the rural entrepreneur navigate a maze of local, state and federal resources for cash and partnering organizations, and “a whole world of regulation and zoning. My job is to make sure it all works.”

Also on the panel were Steve McHenry (smchenry<\@>, executive director, Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO); Jason Challandes (jchallandes<\@>, Regional Educator, Northeast Sustainable Agriculture Research and Education (a USDA branch); and Jessica Danner (JDanner<\@>, loan officer with Virginia Farm Credit.

MARBIDCO, said McHenry, is primarily a lender, makes some grants and “can serve as a financial intermediary” to other sources of capital.

SARE is a source of grants for farm- or rural enterprise-based ventures that are educational. The Farmer Grant is for “commercial farmers who want to test a new idea using a field trial, on-farm demonstration, marketing initiative or other technique.” Also available are Sustainable Community Grants for community organizations making direct connections between community revitalization and farming, and Graduate Student grants for students to research key topics in sustainable agriculture.<\c> Photo by Shannon Sollinger

Lucie Snodgrass, excecutive director of the USDA Farm Service Agency in Maryland; Jeremy Burner, farm loan officer with the Virginia Farm Service Agency; and Jessica Danner, loan officer with Virginia Farm Credit, field questions on securing loans and grants for young and beginning farmers at the Future Harvest CASA conference in Leesburg, Va.

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