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USDA Microloans for Farmers: Participation Patterns and Effects of Outreach

Sarah Tulman, Robert Williams, Nathaniel Higgins, Michael Gerling, Charles Dodson and Bruce McWilliams

No 253739, Economic Research Report from United States Department of Agriculture, Economic Research Service

Abstract: The U.S. Department of Agriculture, Farm Service Agency’s (FSA) Microloan program, launched in January 2013, aims to better serve the credit needs of small farms, beginning farmers and ranchers, veterans, and farmers from historically socially disadvantaged groups (women and minorities). These loans are designed to be more convenient and accessible to nontraditional producers, with a shortened and streamlined application and relaxed criteria for managerial experience, production history, and collateral. Using FSA’s direct loan data to examine Microloan uptake patterns, ERS researchers find that, compared with Microloan-sized traditional Direct Operating Loans, (1) a larger share of Microloans have gone to the targeted groups, and (2) Microloans have attracted a larger number and higher share of borrowers who are new to FSA direct loans. Also, an experiment to test the effectiveness of targeted outreach to farmers proved effective within the States that were included in the experiment: significantly more farmers received Microloans in ZIP Codes that had received the informational letters versus those in ZIP Codes that had not.

Keywords: Agricultural Finance; Institutional and Behavioral Economics (search for similar items in EconPapers)
Pages: 33
Date: 2016-12
New Economics Papers: this item is included in nep-agr and nep-mfd
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DOI: 10.22004/ag.econ.253739

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