Published Nov 20, 2014

Beginning Farmer Microloans – Worth It or Worthless?

By Julie Wheelock

Absolutely WORTH IT!  But anything that’s worth it, comes with some effort.  Tyler Magnuson, a beginning farmer in PFI and a current enrollee of our Savings Incentive Program, has first hand experience with USDA’s microloan program.  He was approved for a $10,000 loan at about 2% interest.  The loan will cost him around $200 and he has seven years to repay it.  Not too shabby.

Caitie and Tyler_edited

Tyler and Caitie at their Botna Burrow Farm in Pottawattamie county.

While the actual loan process wasn’t difficult, it did take some time and preparation.  Along with his microloan application, Tyler put together a whole farm plan, budget for his CSA, and brought in verification of CSA shares sold so the loan officer knew he was serious and profitable with his farm business.  Tyler and his partner Caitie are beginning farmers, working hard at paying off student loans and building credit.  However, they were still asked to provide collateral as security for the loan.  It is in the interest of the USDA to help out beginning farmers, but they have to cover their own tail too.

Tyler said the way the loan works is he had to to list what he intended to purchase with the money on the application.  (It’s possible to change what you plan to purchase, but there’s paperwork involved, so best to be sure what you want when you put it in writing.)  When Tyler’s purchases were made, he notified his loan officer, provided a proof of purchase and then received the money within 2-5 days.  Put simply, the money is not there waiting in your account, you have to request the funds.

What advice does Tyler have for other beginning farmers considering applying for a microloan?  He had three easy tips:  Start early, be polite and be persistent.  He took several months to get information together for his application and actually submitted it in February.  He was approved in April – just in time for spring planting.  (He suggests submitting the application by December so funds are available well before the spring rush.)  His specific loan officer’s region covered four counties so time limitations were a challenge.  Although, once they were able to meet, Tyler said his loan officer was very willing to work with him and positive about getting him approved.  During that final month of waiting for approval, Tyler called his loan officer weekly to keep active in the approval process, always polite, but persistent.

Magnuson_Tyler tractor bought with microloan

New wheels Tyler bought using his microloan funds.

With the loan, Tyler purchased a tractor, implements and a walk-cooler.  All items that will undoubtedly return him more than the $200 price of the microloan.

If you have more questions about mircoloans, please stop in at your local FSA office.  Loan requirements have recently been improved for beginning farmers and the maximum amount has been increased to $50,000.

Tyler Maguson and Caitie Caughey operate a CSA on their Botna Burrow farm in Pottawattamie county.  You are also welcome to contact Tyler at if you want more information from someone who has gone through the process!