Farm Opportunity Loan Program

The Farm Opportunity Loan Program is designed to finance the purchase of equipment to add value to crops or livestock, or to increase on-farm energy production. Eligible loan uses do not include expenses related to seed, fertilizer, fuel, or other operating expenses, and refinancing of existing debt is not an eligible expense.

This is a loan participation program available through the Rural Finance Authority (RFA). Farmers work through their local lender; upon completion of an application, the lender applies for RFA participation. The RFA must have a completed Master Participation Agreement with the lender on file.

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 the principal operator of the farm

• Demonstrate an ability to repay the loan

• Hold an appropriate feedlot registration, or be using the loan under this program to meet registration requirements

The RFA may participate in a Farm Opportunity loan equal to 80 percent of the project or equipment cost. Participation is limited to 45% of the principal amount of the loan or $100,000 per individual, whichever is less. For loans to a group made up of four or more individuals, participation is limited to 45% of the principal amount of the loan or $250,000, whichever is less.

The loan term is a maximum of ten years. The interest rates and repayment terms of the authority's participation interest may differ from those of the lender's retained portion, but the authority's interest rate is currently 2%. The authority may review the interest annually and make adjustments as necessary.

The RFA will provide a 1% interest rate reduction from the standard 5% rate if a farmer uses this loan program to purchase equipment for which an associated equipment safety course is offered; the farmer must complete and submit documentation for the equipment training course to be eligible for the reduction.

The originating lender retains the balance of each loan. The borrower must satisfy the local lender's guidelines, and the local lender controls the day-to-day operation of the loan. Participating lenders may charge a fixed or adjustable interest rate consistent with their normal lending practices and their agreement with the RFA.

Complete the Farm Opportunity Loan Participation Application (PDF) with your local lender, who then applies to the RFA for participation. While all lending institutions are eligible to participate, they do so voluntarily, and each lender must enter into an agreement with the RFA and offer farm loans under certain pre-established rules to qualify for RFA participation. Search for lenders who work with the RFA by county using the MDA's List of Participating Lenders.

If the loan is used to purchase equipment for which an associated equipment safety course is offered, the farmer must complete and submit documentation for that training course to be eligible for the interest rate reduction. Questions: Rural Finance Authority Office, 651-201-6004, 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

• 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

• AGRI Value Added Grant Program: https://www.mda.state.mn.us/business-dev-loans-grants/agri-value-added-grant-program

• Farm Opportunity Loan Participation Program Loan Agreement and Note (PDF): https://www.mda.state.mn.us/sites/default/files/docs/2021-04/AG03309%20Rural%20Finance%20Authority%20Loan%20Agreement%20and%20Note%20for%20RFA%20Farm%20Opportunity%20Loan%20Participation%20Program\_1.pdf