CAD Beginning Farmer Loan Program

The Colorado Agriculture And Development Authority loan program is known as the Beginning Farmer Program. The program involves a three-way transaction among the lender, the borrower and CADA. Through the issuance of a tax-exempt bond by CADA to the lender, all interest paid by the borrower is tax-exempt. The result is an interest rate to the borrower below commercial rates.

1. Bond proceeds cannot be used to refinance existing indebtedness, except in certain limited instances where such previous indebtedness has been approved by the Authority or has been incurred in connection with a previous tax-exempt municipal bond issue.

2. Bond proceeds cannot be used to finance working capital, inventory, raw materials or any other personal property which is not depreciable.

3. Bond proceeds can only go to individuals who own farm land which is less than 30% of the median county farm size.

4. Bond proceeds cannot be used to finance a personal residence or land related thereto.

There are certain fees associated with obtaining a beginning farmer loan through this program. These fees include:

• Application Fee: A non-refundable $50 application fee payable to CADA.

• Legal Fees: Ranging from $750-$1,250 for drafting the necessary document ($750 for loans of $100,000 or less; $1,000 for loans ranging from $100,001 to $200,000; and $1,250 for loans over $200,000. Larger loans may have higher fees).

• Closing Fees: 1/4 of 1 percent (minimum of $100) which covers the costs CADA experiences in closing the loan (the application fee will be applied to CADA’s closing fee); and,

• Annual Fee: Equal to 1/8 of 1 percent of the unpaid principal of the bond. The lending institution may also charge usual and customary fees and points which are mutually agreed upon by the lender and borrower and are approved by CADA.

The following steps are involved in the issuance of a tax-exempt bond through the Colorado Agricultural Development Authority (the "Authority"), Beginning Farmer Program:

1. The Borrower finds a Lender which is willing to participate in the Beginning Farmer Program through the purchase of a Bond.

2. The Borrower submits the Application Form (Below), signed by both the Borrower and the Lender, together with an executed copy of the Preliminary Agreement (Below).

3. The Authority and its bond counsel evaluate the Application Form for compliance with Program Guidelines and state and federal law restrictions.

4. The Authority's bond counsel distributes documents to the Authority, the Borrower and the Lender. After all parties have agreed on all document provisions, the Authority adopts a final bond resolution, holds a public hearing and approves all the details of the transaction.

5. The Authority, the Borrower and the Lender sign all documents; the Authority issues the Bond; and the Lender pays for the Bond, making the proceeds of the Bond available to the Borrower in accordance with the Financing Agreement.

• Beginning Farmer (CADA) Application (pdf file)

• Preliminary Agreement (pdf file)

• Median Farm Size (pdf file)

• CADA Single Project Program Guidelines (pdf file)

• CADA Single Project Program Application (pdf file)

• Tax-exempt Bond Financing For Livestock Nutrient Management (pdf file)

• CADA Livestock Nutrient Management Application (Word Document)