KAFC Diversification through Entrepreneurship in Agribusiness Loan Program (DEALP) (DEALP)

The Diversification through Entrepreneurship in Agribusiness Loan Program (DEALP), offered by the Kentucky Agricultural Finance Corporation (KAFC), is designed to assist agri-entrepreneurs with the purchase, establishment, or expansion of a business that sells agricultural products or services to farmers or consumers.

Eligible applicants are agri-entrepreneurs and agribusinesses that sell agricultural products or services to farmers or consumers.

• KAFC will loan up to 50% of the project cost, not to exceed $250,000. If the applicant has existing agricultural debt with the participating lender and/or FSA, that debt can be used as match so KAFC can participate up to 100% of project costs.

• Priority consideration is given to borrowers with agricultural education and/or experience in agriculture.

• Borrower must be a Kentucky resident, and the project must be located on property in Kentucky.

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

• Eligible projects: equipment purchases; facilities; funds to invest in a partnership, LLC or other agribusiness structure (the applicant must receive equity equal to the investment, and the business must show a positive gain in net worth over the past five years); permanent working capital; real estate; other agricultural investments at the discretion of the KAFC Board.

1. Participating lender must be a financial institution with offices in Kentucky; the lead lender prepares and submits the loan application.

2. Interest rate on the KAFC portion is fixed at 2% a.p.r. for the life of the loan (KAFC may adjust the rate on new loans); the lender services the KAFC participated loan for no more than 0.75% (75 basis points).

3. Maximum KAFC loan term shall not exceed 15 years or the useful life of the asset; loans secured by real estate may be amortized over 25 years with a 15-year balloon.

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

5. Borrower submits a three-year business plan; startup ventures may be required to submit a feasibility study.

6. Borrower must be involved in KCARD's mentorship program.

7. Construction projects must commence within six months and be completed within eighteen months of loan approval; KAFC transfers loan proceeds when the project is satisfactorily completed.

8. There is no prepayment penalty on the KAFC participated loan, and only expenses incurred after KAFC receives the DEAL application are eligible.

9. No borrower may participate in this program for more than 15 years.

10. Applicants with credit scores below 600 or no credit score are reviewed by the KAFC Loan Review Committee; a credit report is required.

Apply through a participating Kentucky lender. Contact Bill McCloskey at the Kentucky Office of Agricultural Policy, (502) 382-6093 or kafc@ky.gov.