Series II Beginning Farmer Loan Program

The Beginning Farmer Loan Program, administered by the North Carolina Agricultural Finance Authority (NCAFA), provides low cost, long term financing to assist North Carolinians in starting farming careers. Loans are provided by NCAFA in conjunction with the Farm Service Agency's Down Payment Loan Program and may be used for purchasing farmland (including existing improvements). Beginning Farmer Loans carry competitive interest rates for farmers who might otherwise not be eligible for loans.

• Individuals, farming corporations, partnerships, or joint operations may apply.

• Applicants must be U.S. citizens or legal resident aliens.

• Applicants must maintain a farming operation in North Carolina.

• Applicants must have operated a farm for at least 3 years but not more than 10 years.

• Applicants must never have held a direct or indirect ownership interest in substantial farmland, with county-specific farm size figures available from NCAFA.

• Applicants must have access to adequate working capital.

• Applicants must be educated or experienced in the type of farming operation for which the loan is sought.

• Applicants must meet the basic eligibility requirements for an NCAFA Series I Farm Real Estate loan.

• Applicants must have sufficient education, training, or experience in managing and operating a farm or ranch to demonstrate the managerial ability needed to succeed in farming.

• Applicants must have the legal capacity to incur the obligations of the loan.

• Applicants must be unable to obtain credit elsewhere without an FSA guarantee.

• Applicants must have an acceptable credit history.

• Applicants must be the owner-operator of a family farm after the loan is closed.

• Applicants must make a cash down payment of at least 5% of the purchase price.

Loan size: "Qualified applicants may finance projects up to $333,500.00 for purchasing land." Proceeds may be used only for "purchasing farmland (including existing improvements)."

Interest rate: "NCAFA loan rate for Beginning Farmer Loan Program is a variable rate of Prime plus .75%, which can change quarterly."

Repayment: "Loans are amortized over 30 years with a balloon payment no earlier than 20 years after loan origination."

Down payment: "The applicant must make a cash down payment of at least 5% of the purchase price."

Fees: "A $75 application fee is required when the application is submitted and a closing fee equal to 1% (1% of NCAFA's loan) may be applicable and payable at loan closing."

Deal structure — the financing is layered with FSA, so NCAFA covers only about half the purchase. The NCAFA application "will be for no more than 50% of the applicants need"; a simultaneous application to the local Farm Service Agency for its Down Payment Loan Program "will be for no more than 45% of the applicants need"; "NCAFA accepts the application as completed by FSA and evaluates making a l[o]an for 50% of the applicant's need." The farmer's 5% cash down payment covers the remainder.

Obtain an application from the NCAFA (its loan request is for no more than 50% of the applicant's need) and simultaneously submit an application to the local FSA office for its Down Payment Loan Program (no more than 45% of need); NCAFA accepts the FSA-completed application and evaluates a loan for 50% of the applicant's need. A $75 application fee is required at submission and a closing fee equal to 1% of NCAFA's loan may apply. Terms: variable rate of Prime plus 0.75% (may change quarterly), amortized over 30 years with a balloon payment no earlier than 20 years after origination. Loan limit: up to $333,500.00 for purchasing land.