Cover photo for Kentucky Agricultural Finance Corporation Beginning Farmer Loan Program

Kentucky Agricultural Finance Corporation Beginning Farmer Loan Program (BFLP)

Kentucky Department of Agriculture

BFLP assists individuals with farming experience who desire to develop, expand, or buy into a farming operation. Eligible projects include purchases of livestock, equipment, agriculture facilities, and real estate; securing working capital; or investing into a partnership or LLC.


1. A KAFC Beginning Farmer will be defined as someone who:

  • Has not owned a farm or ranch for more than 10 years (deeded in name)

  • Has participated in the business operation of a farm for at least three years c. Will be substantially participating in the proposed operation

2. For Borrowers meeting the above definition, KAFC will loan up to $250,000, or 50% of the project cost. If applicant has existing agriculture debt with the participating lender and/or FSA, this debt can be used as match such that KAFC can participate up to 100% of the project costs, not to exceed $250,000. If there is no current debt with the participating lender and/or FSA to be matched, KAFC will be limited to 50% of the project costs, up to $250,000.

3. Annual, off-farm, household income must be less than $175,000, as evidenced by three year’s tax returns based on W-2 income. Income derived from ag-related occupations may be excluded from this calculation (as determined by the board).

4. Borrower must be a Kentucky resident, as evidence by a Kentucky driver’s license or other valid documentation.

5. Project must be located on property in Kentucky.

6. Gross farm income generated by the operation (the entire operation proposed by the applicant, including the property to be purchased or improved) should be at least equal to the annual installments for any debts associated with the real estate purchase or improvement(s).

7. Household and/or operation may have multiple KAFC loans but is limited to an aggregate balance of $250,000 in all programs, excluding the Agriculture Processing Loan Program. 

Eligible Projects:

  • Agricultural facilities

  • Funds to invest in a farm partnership, LLC or other farm business structure

    • Borrower must receive equity equal to the investment being provided

    • Business into which borrower is investing must show a positive gain in net worth over the past five years

  • Equipment purchases

  • Livestock purchases

  • Permanent working capital with provisions to lower KAFC’s involvement each year.

  • Real estate, up to 50%, this does not include residence

  • Other agricultural investments at the discretion of the KAFC board


  1. Participating lender must be a financial institution with offices in Kentucky.

  2. Lead lender is required to prepare and submit the loan application. There must be a commitment by a participating lender who will work with the borrower to capitalize the initial investments outlined in the three-year business plan. The lender will continue to evaluate additional credit needs; however, any additional credit will be at the discretion of the lender and according to their normal underwriting policies. 

  3. Interest rate on the KAFC portion of the loan will be fixed at 2% a.p.r. for the life of the loan. KAFC reserves the right to adjust the rate on any new loans as market conditions change.

  4. Lender must agree to service the KAFC participated loan for no more than 0.75% (75 basis points), for the life of the loan. This fee will be added to the KAFC rate to determine the blended rate.

  5. Maximum KAFC loan term shall not exceed 15 years or useful life of asset, collateralizing loans. Loans secured by real estate may be amortized over 25 years with a 15 year balloon.

  6. Loan must be secured with both fixed assets and the personal guarantee of the borrower.

  7. Lender is encouraged to include KAFC as part of any FSA guarantee request or application. a. In most cases, FSA will waive the 1.5% guarantee fee when the Lender utilizes the KAFC BFLP. Please contact local FSA office for eligibility.

  8. KAFC will consider subordinating debt to participating lender. No future debt can be incurred on mortgaged property without notification of KAFC.

  9. Borrower must submit a three-year business plan (outline available) showing a reasonable return and an ability to retire the KAFC debt.

  10. Borrower must identify a Mentor who meets the criteria described in the application, who will assist the applicant in carrying out the proposed business plan objectives, who has no financial interest in the borrower’s farming operation, who is not an immediate family member (father/mother, son/daughter, brother/sister), and who agrees to meet with the borrower at least once a year, throughout the term of the loan. The mentor is asked to provide an annual report outlining these meetings for a minimum of five years or until notified otherwise. a. KAFC and the applicant recognize the mentor as a volunteer advisor and release the mentor of any liability.

  11. Borrower must acquire all relevant permits and the project must meet all required construction codes. Property must be in compliance with all environmental regulations.

  12. Construction projects must commence within six months of loan approval and must be completed within eighteen months of loan approval.

  13. Participating lender and/or borrower will provide interim financing during construction of project. KAFC will transfer loan proceeds upon satisfactory completion of project.

  14. Any principal and interest payments made by borrower will be shared pro-rata by lender and KAFC unless both parties agree to modified terms. There shall be no prepayment penalty on the KAFC participated loan.

  15. Only expenses incurred after the Beginning Farmer Loan Application has been received by KAFC will be eligible for consideration under this loan program.

  16. KAFC shall review each application and supporting documentation; loan approval will be at the discretion of the KAFC board.

  17. The KAFC Loan Review Committee must review applicants with credit scores below 600 for evaluation and funding recommendation.

  18. Applications with a combined loan-to-value up to 85% may have a government guarantee, but it is not required.

  19. Applications with the approval and obligation of a government guarantee, shall not have a combined loan-to-value greater than 100%.

  20. Any application with a combined loan-to-value greater than 85% without a government guarantee will be referred to the KAFC Loan Review Committee for evaluation and recommendation.

Application Instructions


Financial Instrument


Maximum Award Amount


Updated April 13, 2024

Image Credit: Joshua Michaels

This information was gathered from public sources. Ambrook is not responsible for or able to affect the results of any financial programs listed, nor are they responsible for any incorrect information that is listed or is on the hyperlinked external sites. All information is subject to change.

Explore hundreds more programs on Ambrook.