Nebraska Investment Finance Authority: Beginning Farmer and Rancher Program (NIFA)
Nebraska Investment Finance Authority
The NIFA Beginning Farmer and Rancher Program assists farmers and ranchers to obtain agricultural loans at interest rates generally lower than those available in the conventional farm credit markets. This is accomplished by the issuance of a bond by NIFA, the interest on which is exempt from federal and Nebraska state income tax. The lender then sets the rate of interest on the farm loan to reflect the tax-exempt rate on the bond.
To qualify as a beginning farmer or rancher, the borrower must meet the following criteria:
Be an individual actively engaged in an agricultural or ranch operation or must become actively engaged in an agricultural or ranch operation upon receiving the loan.
- The loan may not be made to a firm, partnership or corporation.
Have a net worth (including the net worth of the farmer's or rancher's spouse) of not more than $500,000.
- "Net worth" for this program is all assets, valued at their fair market value, less indebtedness.
Be an individual who has not at any time had any direct or indirect ownership interest in "substantial farmland".
"Substantial farmland" is any parcel of land greater than 30% of the median size of a farm in the county in which the parcel is located (see Previous Ownership table).
Any ownership or material participation, or financing received by the person's spouse or minor child is treated as ownership and material participation or financing received by the borrower. (Property farmed under a true lease or rental arrangement is generally not considered as "owned".)
An individual who owned farmland which was subsequently disposed of while such individual was insolvent may, in some situations, still qualify as a first-time farmer for this program. Contact NIFA for the specific requirements.
An individual with an interest in a trust, corporation, or partnership, in which the trust, corporation, or partnership owns land, may be disqualified as a first-time farmer. Contact NIFA for details.
The aggregate amount of the loans (subject to limitations on depreciable property) received by a farmer or rancher (including the farmer or rancher's spouse or minor children) cannot exceed $552,500* (*adjusted annually for inflation/deflation).
Eligible Agricultural Projects:
Real estate used in an agricultural operation, including improvements to real estate such as terracing, wells, water impoundment and permanently-affixed buildings used for farming purposes.
The beginning farmer acquiring the farmland must be the principal user of the land, and materially and substantially participate in the operation of the farm.
The land to be acquired is used only for an agricultural purpose.
The total amount of loans to finance the land, together with any portion of the loans allocated to financing depreciable property, may not exceed $552,500*. (See specific limits on financing depreciable property.). If real estate acquired with proceeds of a loan includes the financing of used equipment or other property, the value of such used equipment and property financed as part of the loan may not exceed $62,500. (*adjusted annually for inflation/deflation)
Depreciable property used in an agricultural trade or business, including, but not limited to, equipment and breeding livestock.
The total amount of loans for existing (used) depreciable property/livestock may not exceed $62,500.
The total amount of loans for both new and existing depreciable property (including breeding stock) may not exceed $250,000.
The total amount of loans for depreciable property (subject to the foregoing limits), when aggregated with any NIFA loan for real estate, may not exceed $552,500*.
Proceeds of the agricultural loans may not be used to provide working capital or to refinance existing Ag indebtedness incurred more than 60 days prior to NIFA approval. These loans may be used, with certain restrictions, for property purchased at auction.
Agricultural loan proceeds may be used to purchase eligible projects from a related person under certain circumstances. Contact NIFA with questions on individual situations.
The loan terms (interest rate, length of term, etc.) are negotiated between the lender and the borrower. The term of the loan may not exceed 30 years. The interest rate on the loan must be at a rate that is below what the lender would charge on a similar type of loan not financed with proceeds of a tax-exempt bond.
Nebraska Center For Rural Affairs
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Colorado Department of Agriculture
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Texas Agricultural Finance Authority
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Nebraska Investment Finance Authority (NIFA2)