Aggie Bond Beginning Farmer Loan Program (Aggie Bond)

The Aggie Bond Loan Program is a federal bonding program administered by the State of Minnesota through its Rural Finance Authority (RFA). The program offers affordable financing for a qualified beginning farmer by securing a reduced interest rate on the loan the applicant submits for approval under the program.

Qualified beginning farmers may use the program to purchase productive agricultural farmland; new or used depreciable agricultural property such as livestock used for breeding purposes or dairy production (feeder cattle, feeder pigs, and feeder lambs do not qualify); and farm machinery including trucks. Making an improvement to a farm is also an eligible purpose.

The loan may be financed by a local commercial lender, or through private financing from an individual or an estate (neither of which can be a close relation). The financing entity is required to give a reduced interest rate on the type of loan being made.

A beginning farmer is a person who intends, over time, to become a full-time farmer. The definition excludes established farmers who already own farmland and are expanding their operations; land speculators and investors seeking tax advantages are also not eligible. Farmers who currently rent farmland and those with very limited ownership are eligible.

A beginning farmer must:

• Be an individual who is a resident of Minnesota

• Have a net worth of less than $1,069,000 in 2026 (indexed annually for inflation), including assets and liabilities of their spouse and dependents

• Never have owned more than 30% of the county median size farm where they reside

• Have a financial need for a loan and the ability to repay the loan

• Have sufficient education, training, or experience to succeed in the type of farming they intend to practice

• Be purchasing land, animals, or machinery that will be located in Minnesota

• Intend to be the principal operator of the type of operation involved in the application

• Agree to enroll in a farm business management program approved by the Minnesota Commissioner of Agriculture for at least the first three years of the loan, if an approved program is available within 45 miles of the borrower's residence

• Agree to consult with a local Board of Water and Soil Resources office or the county Natural Resources Conservation Service

Borrowers may wish to obtain credit life insurance for the amount of the debt incurred to purchase the security. Additional income may be earned off the farm by an eligible family member; the RFA recognizes that many farm families need non-farm income to supplement farm earnings, especially in the early years.

A borrower may borrow up to an aggregate of $616,000 under this program, and may have more than one loan under the program as long as they remain eligible under the current rules each time they apply. Within that aggregate:

• Used depreciable property is limited to a total of $62,500

• New depreciable farm property, such as buildings, machinery, and breeding livestock, is limited to a total of $250,000

While there is no set discount required by program rules, the RFA generally expects the interest rate offered to be a minimum of two to two and one-half percent below the current rate being charged for that type of loan.

All other terms are negotiated between the beginning farmer and the lending entity. Real estate loans may be made for up to forty years, though the average is generally around 20 years. Loans for depreciable property are usually not made for more than 10 years and are subject to the Internal Revenue Code. Payment frequency (monthly, annual, semi-annual, quarterly) is likewise negotiable. Zero down is acceptable to the program if a lender is willing to finance a loan that way, though it is not practical in most lending situations.

The RFA collects an allocation fee and a loan origination fee.

Complete the Aggie Bond Beginning Farmer Loan Program Application (PDF) and work with your financing entity: a local commercial lender, or a private individual or estate that is not a close relation. See the MDA's Application Instructions page and the Aggie Bond Summary and Instructions (PDF), and use the Aggie Bond First Time Farmer Eligibility form to confirm eligibility.

Consultation with a Farm Business Management Instructor may help determine whether the planned farming operation can be profitable and self-supporting. For a program summary and additional details, the MDA directs applicants to contact the RFA at 651-201-6556; the RFA loan programs general line is 651-201-6004 / RFA.Loans@state.mn.us.

• Application Instructions: https://www.mda.state.mn.us/aggie-bond-beginning-farmer-loan-application-instructions

• Aggie Bond Summary and Instructions (PDF): https://www.mda.state.mn.us/sites/default/files/docs/2022-12/AGGIEBONDSUMMARY12082022.pdf

• Aggie Bond First Time Farmer Eligibility (PDF): https://www.mda.state.mn.us/sites/default/files/2018-07/aggieeligibility.pdf

• MDA Ag Finance Section: https://www.mda.state.mn.us/financebudget/agfinance

• Approved Farm Business Management Programs: https://www.mda.state.mn.us/fbmprograms

• Loan Comparison Chart: https://www.mda.state.mn.us/business-dev-loans-grants/loan-comparison-chart-1