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Beginning Farmer Loan Program

We Know You’re Planting A Future

The Beginning Farmer Loan Program (BFLP) assists new farmers in acquiring agricultural property by offering loans at reduced interest rates.

The program may be used to assist in the purchase of agricultural land, depreciable machinery or equipment, breeding livestock or buildings. It may also be used to improve existing buildings or farmland but it cannot be used to refinance existing debt.

Benefits to Beginning Farmers

  • Interest Rates Beginning farmer loans typically carry interest rates of 20 to 25 percent below prevailing market rates.
  • Family Transactions Beginning farmer loans can be used for transactions between parents, grandparents or siblings through a third-party lender at fair market value. Contract sales between these parties are not permitted.
  • Down Payment The down payment amount is negotiated with the bank or contract seller. 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 $682,000.
  • 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.

2020 Maxiumum Loan Amounts

  • Land: $552,500.
  • Farm improvements and new depreciable property: $250,000.
  • Used depreciable property: $62,500.

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.

Benefits to Contract Sellers

  • Tax Exemption For contract sellers, the interest earned on the loan is exempt from both federal and state income taxes.
  • Contract Terms Contract terms and down payment are negotiated between the contract seller and the beginning farmer.

    Contracted sales are permitted between related parties but not closely related parties such as parents, grandparents or siblings.

For inquiries about beginning farmer loans reach out to:

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