Loans

Unlike grants, funding received from loans needs to be paid back. The good thing is that there are many loans available to farmers that have very low or sometimes zero interest, and don’t require the same kind of collateral that personal or home loans require. Loans can be very small (microloans), or much bigger, and can be used for many different things such as buying equipment or land, building season extension structures, or helping to cover the start up costs of a new farm or product. Many loans will require you to have a business plan (which doesn’t have to be as daunting as it seems, see our section on how to write one.)

Microloans for Farmers

There are several microloan opportunities for small-scale producers in New Mexico, ranging from $300 – $10,000 with fairly low interest rates and no penalty for early repayment. There is a list of these on the NMFMA Loans and Grants Page

The United States Department of Agriculture (USDA) Farm Services Agency (FSA) offers microloans of up to $50,000 for either operating expenses (things like rent, seeds, compost, labor) or for ownership expenses (including buying land, tractors or other major equipment, or building a greenhouse or other infrastructure). Interest rates are around 5% for these loans. The collateral for these loans can either be your farmland (if you already own it outright) or the agricultural products you will produce (for operating loans only). Operating Loans must be paid back within one year while ownership loans can be repayed in up to 25 years. USDA Farm Services Agency Microloans

Farm Storage Facility Loans

This is a USDA loan program specific to storage facilities which can include on or off farm cold storage as well as drying equipment and some transportation equipment. USDA FSA Farm Storage Facility Loans

Small Business Loans

Your bank may offer loans for small business and if you’re a long-time customer, they may offer competitive rates. Additionally, Dream Spring specializes in small business loans.

Renewable Energy/Energy Efficiency Grants and Loans

The Rural Energy for America Program is a USDA program that provides mostly loans, but also some grants, to support the installation of renewable energy systems on farms/ranches or for energy efficiency upgrades. These might be especially useful for greenhouses that run year-round or refrigerator units. The application for these programs is fairly hefty, but may be worth it for the long-term cost-savings associated with renewable energy. Despite the name, you don’t have to be located in a rural area, as long as the energy system is located on the farm.