KAFC Horticulture Incentives Loan Program (HILP) (HILP)

The Horticulture Incentives Loan Program (HILP), offered by the Kentucky Agricultural Finance Corporation (KAFC), assists specialty crop producers with access to working capital.

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 that KAFC can participate up to 100% of project costs; otherwise KAFC is limited to 50%.

• Specialty crop producers seeking working capital.

• Borrower must be a Kentucky resident, evidenced by a Kentucky driver's license or other valid documentation.

• The primary operation must be located in Kentucky.

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

• Must borrow through a participating lender that is a financial institution with offices in Kentucky.

• Must have a commitment from the participating lender to help capitalize the initial investments in the business plan.

• Must submit a business plan showing a reasonable return and the ability to repay the KAFC debt.

• New vegetable producers must have a contract with a buyer for the produce; this is waived after three years of vegetable production.

• Must carry NAP, Whole-Farm Revenue Protection, Micro Farm, or another KAFC Board-approved specialty crop insurance.

• Loan must be secured by real estate, fixed assets, or equipment with a personal guarantee so that the combined loan-to-value is no greater than 85%.

• If the operation is an entity, all partners must be listed as co-applicants.

• A household or operation may hold no more than a $250,000 balance in the Horticulture Incentives Loan Program.

• Borrowers are limited to 10 years of lifetime eligibility in the program.

• Applicants with a credit score below 600 or no credit score are reviewed by the KAFC Loan Review Committee before a funding recommendation.

The interest rate on the KAFC portion is fixed at 2% a.p.r. for the life of the loan; the lender services the loan for no more than 0.75% (75 basis points). The KAFC maturity date is December 31st of the year the application was submitted. Borrowers are limited to 10-year lifetime eligibility of the program and to a $250,000 balance in HILP. The loan must be secured with real estate, fixed assets, or equipment (and the specialty crop), with a combined loan-to-value no greater than 85%. Borrowers must submit a business plan and carry NAP, Whole-Farm Revenue Protection, Micro Farm insurance, or other approved specialty crop insurance; new vegetable producers must have a contract with a buyer (waived after 3 years of production). There is no prepayment penalty. Eligible projects include seasonal working capital and other agricultural investments at the discretion of the KAFC Board.

Apply through a participating Kentucky lender. Contact Bill McCloskey, (502) 382-6093 or kafc@ky.gov.