Farm Loans Built To Work For Your Operation
Joint Financing Arrangement
Beginning farmers may choose to participate in a joint financing arrangement. With this arrangement, FSA lends up to 50% of the amount financed, and another lender provides 50% or less. The interest rates can be obtained from your local FSA office and the term of the loan will not exceed 40 years or the useful life of the security. Ask an Ag Banker for more details.
USDA Loans For Beginning Farmers And Ranchers
The U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) makes and guarantees loans to beginning farmers as the Agency targets a portion of its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers.
A beginning farmer is an individual or entity who:
- has not operated a farm for more than 10 years
- meets the loan eligibility requirements of the program to which he/she is applying
- substantially participates in the operation
- for FO purposes, does not own a farm greater than 30% of the median size farm in the county.
Note: All applicants for direct FO loans must have participated in the business operation of a farm for at least 3 years. If the applicant is an entity, all members must be related by blood or marriage, and all members in a corporation must be eligible beginning farmers.
Maximum loan amounts are:
- Direct FO or OL: $600,000
- Guaranteed FO or OL: $1,776,00 (Amount varies annually based on inflation)
Down Payment Program
FSA has a special loan program to assist beginning farmers in purchasing a farm. Retiring farmers may use this program to transfer their land to future generations.
Requirements:
- Cash down payment of at least 5% of the purchase price.
- Loan amount limited to 45% of the least of:
- The purchase price of the farm
- The appraised value of the farm
- or $667,000
- Other 50% is financed through the bank.
How to Apply for a USDA Loans For Beginning Farmers And Ranchers
Farmers may apply for direct loans at their local FSA offices. Your local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture or Farm Service Agency or find your local FSA office at farmers.gov. For guaranteed loans, applicants must apply to a commercial lender who participates in the Guaranteed Loan Program. Northwest Bank is a participating lender, contact your local ag banker to get started!
For more information about this and other FSA programs is available from local FSA offices visit www.fsa.usda.gov/farmloans.
Many of our ag bankers are from rural America and grew up on farms. They have personal experience with the joys and challenges of farming as well as unsurpassed ag finance expertise. Talk to an Ag Banker today.
Iowa Finance Authority Beginning Farmer Loans
The Beginning Farmer Loan Program (BFLP) through Iowa Finance Authority (IFA) is intended to help new farmers when purchasing agricultural property, depreciable machinery or equipment, breeding livestock or buildings. It can also be used to improve existing buildings or farmland (but not to refinance existing debt). This loan is originated through the bank and guaranteed by IFA.
Benefits to Beginning Farmers
- Interest rates typically are lower than market rates
- Can be used for family transactions between parents, grandparents, or siblings through a third-party lender
- If eligible, the BFLP can be used in conjunction with down payment assistance through a Farm Service Agency (FSA) loan or Loan Participation (LLP) loan through IFA when financed through a bank.
Eligibility Requirements
- Applicants must be a resident of Iowa and 18 years of age at the time of application.
- Have a net worth of no more than $737,000.
- Have sufficient education, training, or experience for the anticipated farm operations.
- Have access to adequate working capital, equipment, and other items that are necessary to operate the farm.
- Be the owner/operator.
- Own no more land than 30% of the county median acres.
- There is no restriction on off-farm income.
Application Process
- Complete Beginning Farmer Loan application with lender or seller.
- Negotiate loan terms, including interest rate, length of loan, prepayment options, service fees and repayment schedule with lender or seller.
- Submit application, financial statement, background letter, other required materials, and nonrefundable $100 application fee to IADD by the first of the month.
- The IADD Board will review the application at their monthly board meeting.
- After final approval by the IFA Board, the loan can be closed (the closing fee is 1.5% of bond, with a minimum of $300). The total process takes about six weeks. During that time, the lender can provide interim financing, if necessary.
Please note: if the loan is for a confinement facility, feeding contracts must be on a per-head/per-day basis.
Click here to start an IFA Beginning Farm Loan application. For further information on this and other IFA loans visit www.iowafinance.com
Contact an Ag Banker today to get started and discover all the benefits of Beginning Farmer Loans.
Learn More: Top 3 Tips To Help Farmers Manage Their Finances