Frequently Asked Questions
How much money can I borrow?
Emergency Loans: between $5,000 and $15,000
Business Builder Loans: from $5,000 to $30,000
New Producer Loans: from $5,000 to $20,000
How do I know which loan is right for me?
Emergency Loans are reserved for Vermont farmers who have suffered a devastating loss due to a natural disaster that puts their farm or farming career in danger. Business Builder Loans are for Vermont farmers and food producers to fund projects that will build their business and will result in an increase in the diversity of local foods produced in Vermont. New Producer Loans are for new businesses investing in infrastructure and equipment.
Who can apply for an Emergency Loan?
Loan applications are accepted from small and mid-size farms that reside and operate in the state of Vermont and whose gross annual sales for the most recent fiscal year are $20,000 or more. Farms should be in otherwise good financial health, save for the unexpected natural disaster. The loan should help put the farm back on track to profitability. Note, if your farm did not gross $20,000 or more in sales, please contact us.
Who can apply for a Business Builder Loan?
Loan applications are accepted from farms and food producing businesses, as well as businesses that support farmers, residing and operating in the state of Vermont. We focus on small and midscale producers that are trying to build their businesses, and larger enterprises that are working on smaller, innovative projects and pilot business ventures.
For a $10,000 loan we like to see gross annual sales for the most recent fiscal year of at least $20,000. If your business did not gross $20,000 or more in sales, please contact us before applying. Larger loans are reserved for well-established businesses with a successful track record and a strong credit history. Use this chart to help you estimate if you might qualify for a VFF Business Builder loan and expected terms.
Who can apply for a New Producer Loan?
New Producer Loans are exclusively for new/start-up farm and food-related businesses registered and located in Vermont that either produce or source ingredients for their value added food processing from local farms/producers, and have been in operation for 2 years or less (if your business has been in operation for more than 2 years, you qualify for a Business Builder Loan).
What are approved uses for a Business Builder Loan?
These loans are for VT farmers and food producers who are investing and innovating to grow their business, increasing the availability of local foods in Vermont. Eligible projects may be for capital or process improvements. Loans to cover routine business expenses such as payroll, utilities, other loan repayments or goods purchased for resale do not generally qualify. We may cover COGS/working capital loans if they help move a business forward, implement innovative practices and/or are affiliated with a new venture. We do not lend money to purchase real estate. Please feel free to call us at 802.560.3099 if you’d like to discuss your specific project.
How do you decide who gets a loan?
Loan applications are reviewed, overseen, and processed in partnership with an advisory board that lives and works all over Vermont. Our VFF advisory board members have agricultural, community, business, and financial backgrounds. The group carefully considers each loan request and balances the needs and opportunities described in the application with the applicant’s ability to repay the loan. We value references very highly and will seek out information about a grower/producer that may help turn a possible loan refusal based on the numbers into an approval based on strong recommendations. Weight is also given to those with a strong, realistic business plan and those scaling up a new/innovative process or project that will strengthen the VT food system.
Do you check external sources in order to approve a loan?
We ask for the contact information for three references, at least one of whom you have recently done business with. We also use a third party as part of the approval process to request credit reports from all would-be loan signers. Note that sole proprietors, all members of a partnership, as well as any corporate owner/officer with a 20% share or greater in the corporation must sign the loan, and therefore provide access to their credit reports. Credit report data is reviewed confidentially by the Program Manager, who shares the minimum possible information with the Advisory Board in order to make a responsible decision.
Is there an application fee?
No, we do not charge a fee for applying for a loan. However, there is a $14.95 fee assessed by the third party credit bureau for each credit report sent to us. See the question above for who all needs to sign a loan and therefore make their credit report available.
How long does it take to process an application?
Applications are reviewed and responded to within 10 business days. Most loan funds are granted to approved applicants within 14 business days after receiving all required documents.
How quickly do I have to pay back the loan?
Emergency Loans: The loan recipient chooses when to begin repayment anytime in the first 12 months from the date the loan was made. Once repayment begins, the loan is to be repaid within three years on a monthly repayment schedule.
Business Builder Loans: Loan repayment begins the first of the month after the loan was made. Loans must be paid back within 2 years for smaller loans and up to 4 years for larger loans, following a fixed monthly repayment schedule.
New Producer Loans: The loan recipient chooses when to begin repayment anytime in the first 12 months from the date the loan was made. Once repayment begins, the loan is to be repaid within five years on a fixed monthly repayment schedule.
What is the interest rate?
Emergency Loans: Emergency loans are interest-free.
Business Builder Loans: Business Builder loans carry a 3% amortized interest rate.
New Producer Loans: 3% amortized interest rate.
How should I make my monthly payments?
In order to create an efficient structure that helps us ensure timely payments and processing, we require that all borrowers make their payments via ACH online payments on the first business day of the month. Forms are provided during the loan signing process to set up these regular monthly transactions, providing automatic withdrawals from your bank account to cover the payments.
Are there other obligations?
The Vermont Farm Fund is a unique lending model in that when you borrow money, you become part of a lending community. Your loan repayment will go right back out into the community to help another farmer or food producer. Our goal is to grow the fund, and to do that we need the help of our community of borrowers. As a loan recipient, we may ask you to help us get the word out about the fund, to help us with fundraising so that we can increase the number of loans we can make and, most important, to keep repayments flowing back into the fund so that we can make more loans available to other farmers and food producers.
What happens if I am in need of a loan, but there are no funds currently available. Is there a queue?
We encourage you to complete the simple application process. If funds are not available, but you have been approved for a loan, you will be added to a waitlist and notified of when we expect to be able to fund your loan.
What happens to the money I pay back?
The payments received from outstanding loans are the primary source of funds for making new loans. As our fund base grows through donations, and existing loans are paid back, we will be able to fund more loan applications. In the perfect scenario, there will always be enough repayments coming in each month to support the new loans requests received.
Can I apply to the Farm Fund for a grant instead of a loan?
We recognize that some businesses in need might not be in a position to repay a loan. However, the Vermont Farm Fund was set up in the spirit of a revolving loan fund community, enabling us to be self-sustainable. There may be other sources of funding available if a loan seems like it could be a challenge to repay given your situation. We suggest checking with NOFA Vermont and the Vermont Agency of Agriculture – they might be able to direct you to some other funding sources.
Equal Access and Opportunity
All persons applying for a loan will receive fair and equal consideration regardless of their sex, age, national origin or ethnic heritage, race, sexual orientation, religion, location of residence within the area, income, disability, or familial status.