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WSU Extension partners give beginning farmers a loan boost

MT. VERNON, Wash. – Beginning farmers in Skagit County are getting a much-needed boost from a new program that partners Slow Money NW, Viva Farm, North Coast Credit Union, Washington State University Extension and food-minded investors in the region. The project helps new farmers surmount one of the major hurdles producers they face: the start-up costs involved in agricultural enterprises.

New farmer Santiago Lozano (right) holding the paperwork approving his line of credit secured by the Farmer Reserve Fund. Next to Lozano are Grow Food's executive director, Ethan Schaffer, and NCCU loan officer, Carolina Chavez.
New farmer Santiago Lozano (right) holding the paperwork approving his line of credit secured by the Farmer Reserve Fund. Next to Lozano are Grow Food’s executive director, Ethan Schaffer, and NCCU loan officer, Carolina Chavez.

Slow Money NW’s innovative program, called the Farmer Reserve Fund, is extending credit services to beginning farmers by helping North Cost Credit Union leverage its existing resources. The non-profit project made its first loan with NCCU last week to strawberry farmer Santiago Lozano. This week, a second loan was made to vegetable producer Nelida Martinez. The loans allow new farmers to purchase equipment and supplies and then repay the loan within a year.

Slow Money NW, a project of the non‐profit Grow Food, worked to identify the niche between available funds and financial services in the region with the needs of emerging local food and farm businesses. “We wanted to find a model that kept our overhead down and that also utilized the existing resources in the farming community,” said Japhet Koteen, Slow Money NW’s Project Manager. North Coast Credit Union was the ideal partner since it has plenty of deposits available to lend but did not have many low-risk alternatives.

Nelida Martinez is the owner and operator of Pure Nelida Farms. Photo courtesy Amanda Wilson.
Nelida Martinez is the owner and operator of Pure Nelida Farms. Photo courtesy Amanda Wilson. Click image to download hi-res version.

“This was absolutely perfect for us,” said Terry Belcoe, president of NCCU. “We’ve got all the systems and expertise in place to do the lending. What we lacked was the knowledge of and connections with this new market of potential borrowing members. Slow Money NW and Viva Farms had all the pieces that we were lacking.”

Charitable donations from two local investors were used to establish a reserve fund at NCCU in order to reduce risk for the credit union while leveraging its existing deposits. Viva Farms provides an additional layer of due diligence for the fund by screening their student-farmer pool for the best potential financing candidates. The farmers also receive technical and entrepreneurial assistance from WSU Extension’s Cultivating Success program, further insuring their ability to succeed as new farmers.

The Farmer Reserve Fund is a win-win situation for both the credit union that puts its deposits to work in the community and the investors who donated the reserve funds. Each dollar deposited into the fund results in up to five dollars to lend out to beginning farmers.

The farmers also see immediate benefits. “It is very difficult for new growers to access credit,” said Lozano. “I will reserve some of my line of credit to cover any emergencies that come up. The rest I will use to pay my harvest crew before I get paid for sales.”

Martinez said the loan is allowing her to grow her young business. “Thanks to this program, it’s much easier for new farmers like myself to get a loan and keep moving forward. We’re very thankful for the extra help in realizing our dreams.”

Viva Farms is a Skagit County based program with a mission of launching the next generation of sustainable farmers. The Viva Farms Incubator Program was launched in June 2009 to provide new farmers affordable access to education, training and technical assistance; capital and credit; land and markets.

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