Agroforestry Loan Program

The Agroforestry Loan Program provides low-interest financing to farmers during the growing period required to convert agricultural land to agroforestry.

This is a loan participation program available through the MDA's Rural Finance Authority (RFA). Farmers work through their local lender; after the farmer completes an application, the lender applies for RFA participation. The RFA must have a completed Master Participation Agreement with the lender on file. The application fee is $50.

The farmer candidate must:

• Be a resident of Minnesota, or a general partnership, family farm corporation, authorized farm corporation, family farm partnership, or authorized farm partnership as defined in Minnesota Statutes section 500.24, subdivision 2

• Be or plan to become a grower of short-rotation woody crops on agricultural land suitable for their profitable production

• Be a member of a producer-owned cooperative that will contract to market the short-rotation woody crop to be planted by the borrower

• Not have received more than $150,000 in assistance under this program over the producer's lifetime

• Agree to work with appropriate local, state, and federal agencies and the marketing cooperative to develop an acceptable establishment and maintenance plan

• Agree not to plant short-rotation woody crops within one-quarter of a mile of state or federally protected prairie

• Demonstrate an ability to repay the loan

• Meet any other requirements the authority may impose by administrative procedure or by rule

The authority may participate with eligible lenders in agroforestry loans to eligible farmers and agricultural landowners. The authority's participation is limited to 45% of the loan, or $75,000 of total cumulative principal per loan, whichever applies. Interest rates and repayment terms on the authority's participation interest may differ from those on the lender's retained portion. The loan may be disbursed over a period not to exceed 12 years.

Depending on the availability of funds, a borrower may receive loans for planted areas up to 160 acres for up to:

• The total amount necessary for establishment of the crop

• The total amount of maintenance costs, including weed control, during the first three years

• Seventy percent of the estimated value of one year's growth of the crop for years four through 12

Security for the loan must be the crop, a personal note executed by the borrower, and whatever other security is required by the eligible lender or the authority. Lifetime assistance under the program is capped at $150,000 per producer.

Complete the Agroforestry Loan Application (PDF) and work with a local lender, who then applies to the RFA for participation. All lending institutions are eligible to participate but do so voluntarily, and each lender must enter into a Master Participation Agreement with the RFA. The application fee is $50. Questions go to the Rural Finance Authority Office at 651-201-6004 or RFA.Loans@state.mn.us.

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

• Participating Lenders lookup: http://www2.mda.state.mn.us/webapp/lenders/lenders.jsp