More Microloans issued in areas with more beginning and socially disadvantaged farmers

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. These loans (up to $50,000) are designed to be more convenient and accessible to groups not traditionally served through FSA’s credit programs. Although any farmer can apply for a Microloan, FSA reserves 70 percent of its funds for beginning farmers, women, and minorities. Correspondingly, FSA distributed more Microloans in regions with larger shares of farmers belonging to these groups, and in regions with smaller average farm size. Between 2013 and 2015, the number of Microloans increased each year in every region except for the Pacific, where the number of loans first dipped then rebounded above its 2013 level. ERS analysis found that the number of Microloans received by borrowers who were new to FSA direct loans substantially surpassed the number of new borrowers who received Microloan-sized traditional Direct Operating Loans (DOLs) in 2010-12, the three years preceding the introduction of the Microloans program. This difference suggests that the Microloan program likely attracted new borrowers who would not have received traditional DOLs if Microloans hadn’t existed. This chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, published December 2016.