Agribusiness Bond Program

The purpose of the Agribusiness Bond Program is to assist in the development and expansion of agricultural and business enterprises within the State of South Dakota. The South Dakota Economic Development Finance Authority issues tax-exempt bonds and/or notes which the borrower may sell and use the proceeds to finance qualified projects that meet state and federal requirements. The borrower pays the interest and principal directly back to the purchaser or Trustee. The program enables agricultural businesses involved in manufacturing, including ag processing, to save on interest by using federally tax-exempt bonds for up to $10 million. Use of funds: fixed assets.

Agricultural and business enterprises within the State of South Dakota, including agricultural businesses involved in manufacturing and ag processing. Projects must meet state and federal requirements. Use of funds: fixed assets.

What you get: Tax-exempt bond financing, not a grant. "The program enables agricultural businesses involved in manufacturing, including ag processing, to save on interest by using federally tax-exempt bonds for up to $10 million." The benefit to the borrower is the reduced interest rate that comes with the federal tax exemption on the bond interest.

Maximum: $10 million per project.

Use of funds: Fixed assets.

Rate and term: Not set by the state. "Bond purchaser, usually the lender, sets rates and terms." The South Dakota Economic Development Finance Authority issues the tax-exempt bonds and/or notes, and "[t]he borrower pays the interest and principal directly back to the purchaser or Trustee." So your interest rate, amortization and term are negotiated with your lender or bond purchaser, not published by SDGOED.

Conditions: Projects must be qualified projects meeting state and federal requirements (federal tax law governs what qualifies for tax-exempt financing). No issuance fee schedule, minimum bond size, or match requirement is published on the program page.

Complete the Agribusiness Bond Program Application (available from SDGOED). Contact the South Dakota Governor's Office of Economic Development.