For Small Farmers, a Federal Microloan Can Make a Huge Difference

The USDA's newly updated program helps 'niche' growers ramp up business.

(Photo: Matt Jeacock/Getty Images)

Oct 13, 2014· 2 MIN READ
Sarah McColl has written for Yahoo Food, Bon Appétit, and other publications. She's based in Brooklyn, New York.

A hen delicately drawn in black and white, tail feathers so lush and fanned it’s as much peacock as chicken, is the logo for Katie and Nick Provow’s Ruffled Feathers Farm in St. Augustine, Fla. That Nick’s grandmother drew the logo should indicate the kind of small, thoughtful farm business the newlyweds have been growing over the past three years. Last fall, the Provows took over a flock of 600 chickens and an egg CSA from KYV Farm, an organic vegetable farm that’s served as a kind of mentor to the couple.

“They were so generous in helping us get started. We got to piggyback on their good reputation,” Katie says. And that’s helped them garner a good customer base. “I’ve never come home with eggs from the farmers market,” she added.

The demand is there, but Rustling Feathers Farm is at a critical point in its growth. “We need some capital to take advantage of that potential,” Katie says.

Funding could come from the federal government. In early October, the USDA announced an expansion of a microloan program that's available to beginning and family farmers—specifically “niche” outfits. This isn’t more money for growing commodity corn. The maximum borrowing limit grew from $35,000 to $50,000, and the eligibility requirements were broadened to include leadership and management roles in non-farm businesses. In other words, you can hire a marketing person instead of buying a tractor. The changes take effect on Nov. 7.

To get the business off the ground, the couple has relied on savings, as well as small loans—totaling about $5,000—from family and friends. The two are considering borrowing another $5,000 to $10,000 from another relative. The last time Katie looked into the federal microloans available through her local Farm Service Agency, she and Nick didn’t qualify. But now, with a year of experience under their belt, she wonders if they may be eligible.

Fifty thousand dollars could transform the way they do business. Right now, Ruffled Feathers Farm sells eggs the way many producers around the country sell raw milk, Katie says: It has a permit from the state of Florida to sell animal feed, and its eggs are sold marked “not for human consumption” because they are not processed according to Florida state law.

“That’s the biggest concern for us: Our main barrier to growth at this point is not having a place to process our product so we can sell them legally,” she says. “It would make us so much more credible to follow the letter of the law and would open new markets for us. We could spend $50,000 just on that [processing] facility, putting in a septic system and cooling units and a commercial-grade kitchen.”

Last year Kathy Patterson of Sebastopol Microgreens received the first of these federal microloans. She, like many farmers, knows too well about the problem of taking money to make money. “We knew exactly what we wanted to do, we just lacked the funds,” she says. When the Farm Service Agency awarded her a $35,000 loan, the maximum at the time, Patterson used the funds to purchase a slat sower, allowing the company to automate its seeding process. Prior to the purchase, she says, it took an employee a week to fill 100 slats with seeds. The slat sower can accomplish that in half an hour.

“I wrote a thank-you letter to Obama,” Patterson recalls. “I said, ‘That loan was a game changer.’ ” With the seed sower humming, her employee’s time was freed up to water and grow the seedlings; Sebastopol Microgreens was then able to produce twice what it was before the equipment. “We were able to expand and add two new jobs because of that machine,” she says. “Sebastopol only has 8,000 people. For us to be able to add two new jobs is huge.”

Katie and Nick Provow see plenty of potential to grow Ruffled Feathers Farm into a successful and profitable business. “For us, it’s more the challenge of figuring out how to grow in a way that’s smart, keeping with the values that we laid when we first started, like sticking with non-GMO feed, even though it costs twice as much.”

Despite the average farmer concerns that creep in from time to time—that they’re crazy to give this business a go at all—Katie says the community support, more than anything else, is what has gotten them through this first year. Now, just knowing about the expanded microloan program offers a kind of brass tacks assurance too.

“It’s encouraging to know there’s money out there to help us do what we’re doing,” she says. “We just have to figure out how we’re gonna do it and not be scared to make a decision and go with it.”