Value Added Stock Loan Program

Established by the 1994 Minnesota Legislature, the Value Added Stock Loan Program helps farmers finance the purchase of stock in a cooperative, limited liability company, or limited liability partnership that proposes to build or purchase and operate a facility located in Minnesota to process or produce marketable products from agricultural crops. Stock in certain cooperatives proposing to own and operate livestock processing facilities or farm-generated wind energy production facilities may also be eligible.

This is a loan participation program available through the Rural Finance Authority (RFA). The farmer works through their local lender; if the lender agrees to make a secured loan, the lender and applicant jointly complete an application for an RFA participation. The RFA must have a completed Master Participation Agreement with the lender on file.

Applicants must:

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

• Be a grower of the agricultural product that is to be processed by the agricultural product processing facility

• Demonstrate an ability to repay the loan

• Have a total net worth of less than $607,616 in 2026 (indexed annually for inflation), including the assets and liabilities of their spouse and dependents

The RFA may participate in a loan up to 45% of the loan principal, to a maximum of $40,000. The loan term is a maximum of eight years. Interest-only payments are permitted for up to two years, with a fully amortized schedule of interest and principal calculated for the remaining years.

The lender may use a variable interest rate. The interest rate on the RFA portion is a fixed 2.0 percent or one-half of the lender's effective rate (APR) at time of closing, whichever is lower. No more than 95 percent of the purchase price of the stock will be financed under this program.

Security for the loan must be the stock purchased, a personal note signed by the borrower, and other security as required by the lender or the RFA. The value of the security must equal at least 150% of the total loan. A $50 application fee applies.

A lender and an applicant must jointly complete and sign the application form and prepare all supporting documents. In the case of new-issue stock, application may not be made until stock is actually available for issuance from the cooperative; previously issued stock is also eligible. A $50 application fee must be submitted with each application.

Completed applications from eligible lenders are accepted on a first-come, first-served basis while funds are available. Farmers should start with a participating lender (searchable lender list on the MDA site) and contact the Rural Finance Authority Office at 651-201-6004 or RFA.Loans@state.mn.us with questions.

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

• 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 Participation Program Submission Checklist (PDF): https://www.mda.state.mn.us/sites/default/files/docs/2023-10/RFA%20Lender%20Submission%20Checklist%2009202023\_3.pdf

• Loan Agreement and Note for Stock Loan Participation Program (PDF): https://www.mda.state.mn.us/sites/default/files/2018-07/stockloanagree.pdf