Minnesota Rural Finance Authority Beginning Farmer Loan Program

RFA established the Beginning Farmer Loan Program to help people who want to farm in Minnesota. The program offers affordable financing, a reasonable down payment, and built-in safeguards, such as farm business management training and financial planning to help minimize the risk all farmers face. This is a partnership approach backed by the State's financial participation used to finance a purchase or possibly refinance an existing farm debt. Funding an improvement may be possible if done in conjunction with the requested financing package.

The MDA's Rural Finance Authority (RFA) is the state's main agricultural lending arm with a mission to develop the state's agricultural resources. RFA offers low-interest loan programs for a variety of farm activities, including:

• Land purchases

• Farm improvements

• Equipment

• Meat and poultry processing

• Operating capital

• Debt restructure

• Disaster relief

RFA partners with local lenders to purchase a portion of a farmer's loan at a lower interest rate. We utilize the local lender's supporting documentation, so farmers have limited application paperwork with us and only make payments to their bank. As of May 2023, RFA has invested in more than 3,800 participation loans, totaling over $360 million to Minnesota farmers since 1986.

A beginning farmer is a person who intends, over time, to become a full-time farmer (this may exclude some established farmers expanding operations; land speculators and investors seeking tax advantages are not eligible). Borrower and spouse may have off-farm income but must show via cash-flow statements that more than 50% of gross income will come from the farm operation. A farmer must: be a Minnesota-resident individual, domestic family farm corporation, or family farm partnership; have sufficient education, training, or experience; have a total net worth of less than $1,069,000 in 2026 (indexed annually for inflation), including spouse and dependents; have financial need and ability to repay; agree to be the principal operator and make farming their principal future occupation; enroll in an approved farm business management program for at least the first three years (if available within 45 miles); consult the local Board of Water and Soil Resources or county NRCS; and obtain credit life insurance for the debt incurred.

This is a participatory loan: RFA partners with local lenders to purchase a portion of a farmer's loan at a lower interest rate. Each loan has a loan-to-value of no more than 90%; amortization is 15, 20, 25, or 30 years, but loans balloon and require full payment of the RFA portion 10 years from the effective date. Loans carry a prepayment penalty equal to 10% of the outstanding balance in the first 5 years, decreasing 2% annually. RFA participation is limited to 45% of the lender's loan up to a maximum of $500,000, and takes a full $3,500 debt per acre on its portion. A borrower may use the program more than once, to an aggregate amount of $500,000 (e.g., one loan for $325,000 and one for $175,000). The RFA charges a reduced, roughly fixed (for 10 years) interest rate on its portion; the actual rate paid by the farmer is an average of the RFA and lender rates.

To apply for an RFA loan contact one of our loan officers at 651-201-6004 or RFA.loans@state.mn.us. You can also start your loan application by reaching out to your local lender. Search for lenders who work with RFA by county with our List of Participating Lenders.

RFA Loan Brochure