Agriculture Best Management Practices (AgBMP) Loan Program (AgBMP)

The AgBMP Loan Program is a water quality program that provides low-interest loans to Minnesota farmers, rural landowners, and agriculture supply businesses. Its purpose is to encourage agricultural Best Management Practices that prevent or reduce runoff from feedlots, farm fields, and other pollution problems identified by the county in local water plans. Private and cluster septic system installations, upgrades, or repairs anywhere in Minnesota are also eligible.

The program helps landowners comply with water-related laws or rules, provides funding in all counties, and can be used alongside state and federal cost share or other funding sources. Projects are managed through local Soil and Water Conservation Districts or County Environmental Offices, and loans are written between the borrower and a local participating lender; the MDA sends funds to the local bank once the project is complete.

Eligible borrowers include:

• Farmers: anyone who reports any farm income on their federal tax forms

• Rural landowners: as defined by the local government (definitions may be based on administrative, land use, or economic concepts)

• Agriculture supply businesses: any business providing materials or services to farmers, where the service provides primary water quality benefits (examples include custom manure applicators and variable rate technology for fertilizer application)

• Anyone, for septic work: private and cluster septic work is eligible at any location within Minnesota

• Water quality cooperatives as defined in Minnesota Statute 115.58, subd. 1(d)

• Groups or organizations established to manage a shared (cluster) septic system

The program funds any activity or practice that helps improve or maintain high water quality, including agricultural waste management, structural erosion control, tillage equipment for nutrient or residue management, septic systems, cover crops, well work, and wetland restoration.

Ineligible: tractors; new construction that does not improve existing water quality; refinancing of projects already completed with conventional lender financing; manure handling equipment or feedlot improvements on feedlots with more than 1,000 animal units that are not in the Mississippi watershed district; and activities for any operation that has a court-ordered filing brought against them to implement. (Notices of violation do not affect eligibility.)

• Loan amounts are limited to $200,000 to any one individual. Borrowers may have multiple outstanding loans, but the aggregate sum of all AgBMP loans may not exceed the $200,000 principal balance maximum.

• The maximum interest rate is 3 percent, plus other normal and customary charges. (The MDA publishes a comparison showing, for example, $17,231 total interest at 3% versus $35,868 at 6% on a $100,000 10-year loan.)

• Maximum loan term length is 10 years.

• The frequency and number of payments are flexible and negotiated with the lender.

• Example fees include insurance, mortgage handling, filing, default and delinquency, and yearly maintenance fees.

• The county and local lender may set additional terms and requirements for project eligibility.

The program is a revolving loan fund. Clean Water Fund appropriations of $28.8 million have, through 12/16/2025, supported 2,884 loans representing more than $85.7 million in total project costs and leveraging over $56.9 million in collaborative funding; under the revolving framework the appropriations have been used 1.8 times.

The borrower completes three steps, in any order:

1. Meet with the local county government contact to propose a project or purchase that maintains or improves water quality. If it meets state and county eligibility requirements, the county may approve it.

2. Meet with a local lender to verify credit for a loan and confirm the lender is willing to work with the AgBMP loan program.

3. Purchase or complete the project or practice.

Once all three steps are complete, the borrower takes their approved AgBMP application form, along with project receipts, invoices, or equipment purchase orders, to their local lender to process the loan.

Local government and lender contacts are found on the AgBMP Loan County Contacts and Lenders map. Call your local county office to learn about specific local application procedures; if your local bank is not on the list, you may ask them to contact the MDA to become an AgBMP lender. Program questions: AgBMP.Loans@state.mn.us or 651-201-6618.

• AgBMP Loan County Contacts and Lenders map: https://mnag.maps.arcgis.com/apps/webappviewer/index.html?id=6c32d25618d1428194a2d31e333c080a

• AgBMP Loan Program Borrower Information: https://www.mda.state.mn.us/agbmploan/borrower

• Local Government Information: https://www.mda.state.mn.us/local-government-information-agbmp-loan-program

• Lender Information: https://www.mda.state.mn.us/lender-information-agbmp-loan-program

• Clean Water Fund Allocation: https://www.mda.state.mn.us/business-dev-loans-grants/funding-allocation

• AgBMP Loan Program Example Practices (PDF): https://www.mda.state.mn.us/sites/default/files/2018-05/agbmpexamplepracs.pdf

• AgBMP Loan Program 2023 Biennial Status Report: https://www.lrl.mn.gov/docs/2024/mandated/240283.pdf