Through our work with farmers, New Jersey Audubon (NJA) identified the need for an innovative initiative that would consider farm economics and wildlife conservation together. We realized that even if a farmer was interested in conservation on the farm, in many cases they had neither the upfront money nor the right equipment to implement conservation practices, though government programs offered eventual reimbursements.
To respond to this need, in 2006 NJA created a revolving resource fund to provide conservation program enrollees with a start-up funding source to implement approved conservation practices. This "mini-loan” program provides financial aid to farmers who are enrolled in existing government-sponsored conservation programs. The loan serves as start-up money for farmers until they are reimbursed by the federal or state agencies for implementing the conservation practices.
For tax purposes, NJA cannot distribute these funds directly to an applicant without charging interest. Therefore, each allocation of funds to an applicant is accompanied with an Agreement for Payment which indicates they must repay the loan at the minimum allowable interest rate of 1 percent. Any interest paid by the borrower is far less than the interest that would be charged by a credit card or bank loan, and interest earned by the program goes directly back into the fund for the next farmer to use.
To date the Mini-Loan Program has provided loans to New Jersey's farmers for conservation projects totaling more than $400,000. We began with only an $80,000 budget to work with. How's that for leverage!